Why isn’t the auction clearance rate worse?

Mortgage loan approval times are three to four business days with many lenders, he said.

“Not that there’s less scrutiny, but there’s probably less focus on that. [expenses] compared to what we’ve had in the past,” he said.

“Clients have in mind that this is a bigger problem compared to what banks and brokers consider.”

A bank that used to scrape its clients’ bank accounts to calculate living expenses has now switched to accepting clients’ declared living expenses, he said.

“What becomes the problem is diminishing borrowing capacity,” he said, as interest rates rise and banks assess buyers’ ability to repay their loans if interest rates go higher than expected. that was originally thought.


Maximum loan sizes from potential buyers have been reduced by 20 percent since the cash rate began to rise in May, the Reserve Bank said Monday.

Monthly payments on a new loan are about 25 percent higher now, at a 2.35 percent cash rate, than they were before May, RBA head of domestic markets Jonathan Kearns said.

He repeated the model from April that showed a 200 basis point increase in interest rates would lower real house prices by about 15 percent over two years, stressing that this was not a forecast.

Several bank economists expect property prices to fall 15 to 20 percent from peak to trough, including Barrenjoey, who on Monday 16 percent national decline forecast at a cash rate of 2.85 percent. So far, Sydney shares are down 7.6 percent and Melbourne 4.9 percent, while Brisbane is down 2.9 percent and Perth is down 0.2 percent.

Mortgage broker Chris Foster-Ramsay said lenders’ attitudes toward homebuyer spending are similar now to what they were during the recent housing boom.

“Expenses, as long as they are verified and make sense, do not, generally speaking, interfere with an application,” said Foster Ramsay Finance’s senior broker.

He said home loan approval times are fast now, often three to four days if not sooner, though buyers’ ability to borrow has shrunk.

Mortgage Choice Blaxland, Penrith and Glenmore Park Director Rob Lees said the focus on living expenses is waning, especially from major banks that have increased their living expense benchmarks, which were once modest.

He has been surprised that auction clearance rates are not lower, but said property prices have come down.

Property prices are expected to fall further.Credit:justin mcmanus

“Suppliers are definitely lowering their expectations, and I think that’s how they get sales and that’s why they don’t go overboard,” he said.

“Sellers are very keen to sell because they know if they don’t sell now and wait six months, they probably won’t get the same price.”

Ray White Chief Economist Nerida Conisbee said banks become more profitable in higher interest rate environments, which means it’s in their best interest to encourage people to borrow money.


Sellers are adjusting to a slower market and adjusting their expectations about the price they can fetch, he said, or deciding not to list their home in the first place.

“We see fewer auctions going on in a down market, so people will hold back and do private sales and decide not to sell, or only the best properties will go to market,” he said.

Several factors continue to drive purchases, including record rent increases, rising renovation costs and population growth.

“A renovated family home – they seem to be selling quite well and holding prices down,” he said.

“Fundamentally, what tends to come up for auction is what people want to buy, even in a down cycle.”

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