What are they and Why?
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 against the advisable growth. 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
Capping investment interest only loans whereby a client would need 20% deposit or equity in another property.
Some lenders are intending to increase their existing investment loan interest rates slightly.
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.
We still have some lenders on panel who will lend up to 95% for investor loans.
At its May meeting, the Reserve Bank of Australia chose to keep the official cash rate on hold at 1.5 per cent. What this means for you?
Interest rates remain low, so it’s still a great time to invest in property or to purchase a home! Despite some lenders raising interest rates on both owner-occupier and investment loans in recent months, interest-only and investor loans remain cheaper than a year ago.
The debate about housing affordability, negative gearing, capital gains tax discounts and borrowing through Self-Managed Super Funds has dominated the news in recent months, and it will be interesting to see what the federal budget holds next week.