Sunday , June 26 2022

Why I think home buyers should focus on their finances, ignoring APRA and the RBA



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Prospective first-time buyers have been thrown several bones this week, but we believe everyone should keep their financial focus.

There are large banks of Commonwealth Bank Australia (ASX: CBA), Westpac Banking Corp. (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) a National Australia Bank Ltd (ASX: NAB) has received a boost this week after the Liberals won the Federal Election.

APRA and RBA would like first home buyers to enter the housing market and have identified some important potential changes.

Today APRA has said banks may not expect a borrower's ability to repay the loan if the interest rate was 7%, instead it could ask them to consider whether a borrower can repay the money. interest rate loan 2.5. % higher than what they pay.

RBA is expected to reduce interest rates next month to boost the economy and homeowners.

When you coupled the above two moves with the fact that the government could help pay the borrowers mortgage insurance from January 2020, you can see that the housing market could t have a short term boost.

But if you plan to buy a home, I don't think you should rush into anything.

Sometimes a mortgage is a 30 year project to pay. Interest rates can be low this year, lower in 2020 or even for the next few years. But they may not always be so low. In a decade from now, interest rates could be 4% or 5% higher.

It 's very unlikely that the housing market boom times in Australia will go back anytime soon, so don't feel you' ll miss out if you 're not jumping in the next month. It is more important to establish your finances correctly for when you own a home.

Ready ready food

If you do not have a 20% deposit, then you could register for too much interest if you get a loan too early. Owning a home is very expensive – the council's extra rates, water rates, building insurance and perhaps body body fees add a lot to household spending, you don't want to be prepared to repay your loans too. .

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Motley Fool contributor Tristan Harris has no situation in any of the stocks mentioned. Motley Fool Australia owns shares of National Australia Bank Limited. We may not all believe that we are Cool, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorized by Scott Phillips.

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