Economics
Australia’s Lending Rules Are About to Batter Home Buyers
- Borrowing firepower may be slashed up to 35%, UBS analysts say
- Mortgage crackdown set to drag on property as boom tails off
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A toughening of lax lending standards in Australia is threatening an already-cooling property market.
An inquiry into misconduct in the financial industry is likely to lead to greater regulation of the nation’s A$1.6 trillion ($1.2 trillion) mortgage market. Banks have routinely relied on an unrealistically low estimate of homebuyers’ living expenses, and a more genuine assessment of spending could reduce borrowing power by as much as 35 percent, according to UBS Group AG analysts.