Changes to residential investment lending
The Australian Prudential Regulation Authority (APRA) who oversees and regulates banks have placed restrictions to investor lending and have tightened this space.
Their concern is that property investment lending is doubling its growth each year (about 21%) against the advisable growth of 10%. APRA is concerned by the significant growth in the number of investment loans and advised lenders they need to take action to limit it.
In response, lenders are tightening their lending criteria for investment borrowers.
Some of the changes include:
Reducing the maximum loan-to-valuation (LVR) ratio for new investment loans
Removing interest rate discounts offered on new investment loans
Changing the qualifying criteria for new investors
Increasing the loading buffers that apply to serviceability assessments (this has the effect of reducing maximum borrowing capacities)
Requesting additional documentation from borrowers when they apply for new investment loans
Some lenders will move to Increase existing interest only investment home loans
Tightening restrictions around lending to self-managed super funds
On the 29th of July 2015, AMP made a decision to cease all new investment lending until further notice.
Some lenders are intending to increase their existing investment loan interest rates slightly.
This action by APRA does not affect owner-occupied home loans.
If you would like further clarification on the above and to understand how this change may affect you, please feel free to give us a call or message! We are more than happy to assist.
