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Westpac expects the Reserve Bank of Australia (RBA) to raise interest rates again in May, marking a dramatic reversal from expectations of rate cuts just six months ago. The bank's chief economist, Luci Ellis, outlined the forecast citing persistent inflation and stronger-than-expected demand growth as key factors driving the change in the monetary policy outlook.

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AMP Bank's SuperEdge product has officially reentered the market, marking the second-tier lender's return to the SMSF lending market after eight years. AMP Bank, alongside the vast majority of traditional lenders, left the SMSF lending space in the late 2010s following years of regulatory scrutiny over leveraged superannuation investments. Both the 2014 Financial System Inquiry and the Banking Royal Commission warned that leveraging superannuation to invest, including in property via limited recourse borrowing arrangements, can magnify losses and threaten retirement adequacy. The Inquiry recommended that the government restore the general prohibition on direct borrowing by superannuation funds. These concerns were amplified when housing prices softened in parts of Australia in the late 2010s, prompting major banks including Commonwealth Bank, Westpac and Macquarie to stop offering SMSF lending products.

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NAB has some great policy differences which we will do our best to summarise as short as possible.

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New research from Money.com.au, reported by news.com.au, is prompting calls for Australian mortgage brokers to sharpen conversations about upfront purchase costs, as more buyers capitalise stamp duty and fees into their loans without understanding the long-term interest hit. Money.com.au found around half of Australian buyers are increasing their home loan to cover government charges and transaction costs such as stamp duty, conveyancing, and settlement fees, rather than paying them from savings. Within this group, 28% capitalised all upfront costs, while 18% borrowed extra to fund stamp duty alone.

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From 1 February next year, banks must limit high debt-to-income ratio to 20 per cent of new lending. The Australian Prudential Regulation Authority (APRA) is bringing in new lending curbs for high debt-to-income (DTI) mortgage lending to pre-emptively contain a build-up of housing-related vulnerabilities in the financial system. From 1 February, banks must limit home lending of six times income (or more) to 20 per cent of their new mortgage lending.

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