What changed on 1 July 2024? Not much.

You might have heard a lot of noise in the media recently about changes to lending rules. The Loan to Value Ratio (LVR) and Debt to Income (DTI) regulations have been revised.

You can read the nitty-gritty here . But our advice is to take it all with a pinch of salt.

There’s something much more important going on, which means the loan floodgates are unlikely to open for a while yet. 

Bank rates will probably remain high for some time.

Putting aside any talk of DTIs or LVRs, what really makes a difference is the test rates that apply to any new lending. A test rate is the hypothetical interest rate the lender uses to see if you’ll be able to cope if rates should jump sometime in the future.

Currently, these test rates are set around 8.95%. The bank will stress-test any new loan at this rate. If your finances can’t handle the test rate, you won’t get the loan.

The bottom line is that until test rates drop substantially, you will be unlikely to get a new loan in July or August that would have been declined in June. So the DTI and LVR are beside the point – the bank will simply say no.

At some point in the (hopefully) not too distant future, rates will drop, and banks will relax their test rate criteria. It might be later this year or sometime in 2025 – we don’t have a crystal ball.

When test rates drop, the game will change. Not before.

Talk to us to get the full picture.

Of course, every loan is unique, so it’s always worth talking to our advisers to explore the possibilities. We will listen to your plans and provide our expert guidance about the best options for re-fixing or re-mortgaging.

Just send me an email or book an appointment using the links below.

Or you can log into our calendar and book a meeting any time, by clicking on the link at the bottom of our emails.