How will proposed changes in the Australian budget impact on my residential mortgage? That is the question many Australians are asking in the lead up to the Federal Government’s Budget in a few weeks time.
Largely, it is expected people with a residential mortgage will have minimal if any impact on them.
Minimal impact for residential mortgage holders
However, those who are looking to property investment to grow their wealth and their retirement nest egg are already feeling the impact of changes made by the major banks as a result of tighter lending regulations introduced by the Australian Prudential Regulation Authority (APRA) which oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, private health insurance, friendly societies and most members of the superannuation industry.
In a nutshell, the tighter regulations introduced by APRA, such as higher interest rates and tighter lending criteria on property investment loans, means the costs associated with these loans are now greater for current investment property owners as well as potential new investors.
On top of that, property investors now also face potential changes in the Federal Budget, such as changes to negative gearing, capital gains tax and changes to superannuation, which can potentially have a large impact on property investment and the funds available when you retire.
That said, the Federal Government needs to tread carefully, because at a base level, if they make it too hard for property investors, it could have a large and negative impact on the number of dwellings available or built for people who rent, because if there are fewer dwellings available to rent, it means supply is tighter and prices for rent will increase. This could potentially leave many unable to afford to rent, let alone save to buy a home.
One thing is for sure, if you are looking to buy your first home or grow your property investment portfolio keep an eye on the Federal Budget which is handed down on Tuesday 9 May 2017.
If you have any questions about your mortgage simply call me and ask on 0417 649 145.