Banks need to test whether new customers could manage their repayments with an interest rate 3 percentage points higher than the actual interest rate on the loan. Until now, banks have added 2.5 percentage points – known as a “service child buffer” – to the loan interest rate when assessing a customer.
APRA said it believed its actions would reduce new customers’ lending capacity by about 5 percent.
Treasurer Josh Frydenberg said APRA’s move was well-targeted and argued it would likely affect investors more than other borrowers.
“What has been gratifying in this cycle compared to previous cycles is that there are more first homeowners, more owner-occupiers on the market. And this move will affect investors more than it will affect the first home buyers, ”he told Seven Network.
As NSW, Victoria and ACT approach key dates for their reopening of COVID-19 lockdowns, wage figures from the Australian Bureau of Statistics released on Thursday showed the total number of people on company wages has fallen below pre-virus levels, with women and young workers again suffered most from the pandemic restrictions.
The number of people on corporate wages fell by 0.7 per cent in the fourteen days to 9/11 after a fall of 1.5 per cent in the fourteen days before that.
Victoria (down 1.8 percent) and ACT (down 2.3 percent) took the biggest hits, while NSW fell a further 0.3 percent.
Since lock-in, there has been a 9.2 percent drop in the number of people on NSW business salaries. There has been a 10.2 per cent drop in NSW women on state wages, while people aged between 15 and 19 have suffered a 28 per cent drop.
It’s the same story in Victoria with its lockdown, which started several weeks after NSW. The total job on wages has fallen by 7.2 per cent, with women (minus 8 per cent) doing worse than men (minus 6 per cent).
The area hardest hit has been ACT, where jobs have fallen by 12.2 percent.
Westpac senior economist Justin Smirk said small and medium-sized businesses took a bigger hit on jobs than previous lockdowns.
“There is clearly a lot of pressure on small businesses in NSW and Victoria, but overall the recovery has a strong foundation to build on given the strength of larger businesses,” he said.
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