Prudent Policy on Debt to Income Ratio

You may hear some noise in the media around the government’s measures to control mortgage lending (in an effort to slow down the overheating property market, particularly in Sydney and Melbourne).

There is sound reasoning behind the need to control the debt to income ratio (which is aiming to be six times annual income to mortgage debt).

Whilst Australia enjoys the lowest interest rates in history, the government has a stark realisation that this cannot go on forever, and when interest rates do rise, the debt ratio will play an important role to how the economy operates in a rising interest rate environment.

This is particularly important for young people entering the housing market, as their experience with managing mortgage increases as interest rates rise would be quite limiting.

Perth in itself has the lowest income to house price ratio in the nation, so in effect this prudent policy may not have such an impact in the West.

To discuss further, please feel free to contact me on 0437 922 210 or andre@thanegroup.com.au

Disclaimer:This post and or its links or the content of the post or links do not represent the views, intentions or advice of any business component of the Thane Group.This post and its links are not intended in any way to formulate any part of advice formal, personal or otherwise. This post is designed for the information only purposes of its audience.

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