RBA says financial stability more important than struggles of first home buyers

By |
In a low interest rate environment ensuring financial stability is more important than helping first home buyers into the property market, the Reserve Bank of Australia has claimed.

Speaking to the House of Representatives Standing Committee on Economics Inquiry into Home Ownership, the RBA’s head of financial stability department, Luci Ellis recognised the importance of home ownership. 

“Outright home ownership is widely regarded as key to avoiding poverty in old age. Before that life stage, home ownership is also regarded as a way to obtain the security of tenure that is so important to the wellbeing of many households…” Ellis said.

However, Ellis says maintaining prudent lending and financial stability in a low interest rate and high house price environment is what the regulators and banks should focus on, even to the detriment of first home buyers who are struggling to get onto the property ladder in such a competitive landscape.  

“Nonetheless, while there has been much debate on this issue, from a financial stability point of view it is helpful that there has been no push to improve the position of first home buyers by easing lending standards,” she said.

“As recent experiences in other countries have shown, such a step would probably be counterproductive in the longer run.”

Confirming the recent action by lenders to slow the growth in their investor home loan portfolios, Ellis says property investment has been a main factor in driving up house prices and subsequently locking out first home buyers.

“Investor interest in property has been especially strong in recent years, no doubt partly encouraged by low interest rates and the prospect of (concessionally taxed) capital gains… The result has been that the housing sales market has become unusually concentrated in investor activity, particularly in the larger cities. 

“At the margin this has probably priced some aspiring first home buyers from properties they could otherwise acquire.”

Can you afford to buy in this suburb? Find out how much you can borrow

Top Suburbs : mt gravatt , redcliffe , rooty hill , campsie , leumeah

go back

Get help with your investment property

Do you need help finding the right loan for your investment?

When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.

Just fill in a few details below and we'll then arrange for a local Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus and appointment is free.

How soon would you like a mortgage?
What is your Annual Household Income i $
Do you currently own any Investment Properties?
Do you own your own residence?
How much equity do you have in all your current properties?
First Name
Last Name
Where do you live?
What number can we reach you on?
E-mail address
We value your privacy and treat all your information seriously - you can check out our privacy policy here