Australia's Council of Financial Regulators is holding households"prisoner" by keeping the mortgage serviceability rate at three percent says economist Leith van Onselen.
The issue, according to Mr van Onselen, is that with 12 interest rate rises in almost as many months homeowners who had moved from low fixed-rate mortgages to higher variable rates were now being assessed on their ability to meet repayments at"around ten per cent mortgage rates." "What this effectively means is loans that they qualified for during the pandemic, they no longer qualify for."
Mr van Onselen said borrowers being locked into loans they could no longer afford is"very bad" for financial stability as it could lead to many Australians being forced to sell their homes or default on their loans. Picture: Getty Images
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