Relaxed lending laws will boost real estate prices

Real estate markets are expected to get another boost if the Australian Government’s plan to ease responsible lending laws goes ahead next month.

The plans were first announced in September of last year by Treasurer Josh Frydenberg. The relaxation of these laws is a means to encourage further lending and investment, and subsequently economic recovery.

Easing these responsible lending laws would make it easier to obtain a home loan, with estimates showing that the average customer could borrow an extra $70,000.

CoreLogic’s Head of Research, Eliza Owen, said that “the rate in which credit flows into housing purchases could have added housing demand and put upward pressure on prices.”

When the Treasurer made the announcement, house prices were at a stand still and Australia was in the middle of its deepest economic contraction since the 1930s.

The situation is now drastically different, with house prices seeing significant upward movement. So the question remains: does the Treasurer still believe that relaxing these laws is necessary, or will the Government reconsider their stance? ∎

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