Hi ,

Some house prices are easing; however, the interest rate rises are resulting in banks reassessing the borrowing capacity of buyers, particularly first home buyers.

It was the dream of many Australians when they thought they would finally get a chance to get into the market after the big banks forecasted the biggest property price plunge in history earlier this year. But, interest rate hikes are squeezing buyer borrowing power faster than home prices are currently falling.

Recently, Reserve Bank Head of Domestic Markets, Jonathan Kerns revealed the size of mortgage buyers can afford fell a staggering 20 per cent in the past five months, 
which coincides from when the RBA began its record streak of rate hikes to try to curb inflation.

Dr Kearns said "A lot of media attention is placed on the increase in existing borrowers' repayments when interest rates increase, but higher interest rates also reduce the maximum loan size for prospective borrowers looking to purchase housing".