Borrowing Capacity Crisis: How Banks Are Increasing Rates for New Borrowers!
At the moment, borrowing capacity has been reducing for new borrowers. So those first home buyers trying to get into the market or investors trying to borrow to buy that investment property, we're finding that their borrowing capacity has continued to decline.
The main reason is the higher interest rates and that's been driven by the RBA, the Reserve Bank, lifting their official rates and the banks are following. But what a lot of people don't know and what hasn't been advertised is that the banks are actually increasing their rates to new borrowers and the media hasn't picked up on it.
And the way they're doing that is by not offering as high of a discount against the variable rate. So where we used to see that the banks would just follow the Reserve Bank, the banks are actually lifting rates, not flagging it to the media, and borrowing capacity is reducing, causing people to borrow less and therefore purchase for less as well.