Market Update: April 2023 – Borrowing Capacity

We have finally reached a pause on RBA cash rate increases, which has provided us with a small opportunity to catch our collective breath. We’re all a little tired of the never-ending chatter surrounding the RBA, and there seems to be change coming, so we’ll leave it at that for now and consider borrowing capacity.

Why borrowing capacity has reduced in 2023

What we will talk about is borrowing capacity. Lowered borrowing power has now become somewhat problematic for our clients that are currently attempting to purchase residential property, or simply refinance to a better deal for an existing loan (what is referred to as a mortgage prisoner). It’s important to highlight this issue, as many of us may not be aware that the assessments that have been conducted not so long ago (and we’re talking only the end of 2022), may be drastically out of date with how lenders are assessing today.

Most lenders have now announced increases to their Household Expenditure Measure (HEM), due to the high level of inflation which is clearly impacting our everyday living expenses. This has become a key factor influencing lowered borrowing capacity, as a lender is more likely to use the higher figure of their HEM and your own detailed living expenses. Pair the increased HEM with higher interest rates and lower than desired wage growth, and this is unfortunately the outcome.

With a quick chat about your financial position, we can establish your borrowing power fairly quickly on a preliminary basis. This may identify the opportunities that are realistically available to you, whether it’s a refinance, new home or investment property.

Watch this space… 68 Greenhill Road, Wayville.

We’ve now closed doors on 213 Fullarton Road, Eastwood and have been busy fitting out our new head office at 68 Greenhill Road, Wayville. Whilst it’s definitely in the process of a makeover, we’re extremely excited at what the future has in store for us at our new home. We can’t wait to share more news once the refresh of 68 Greenhill Road is complete. Watch this space…

And don’t worry, our team located in the South Coast at 88 Beach Road, Christies Beach is well and truly still with us.