As APRA tightens the rules on property investment lending, the Reserve Bank of Australia has decided to keep the official cash rate on hold at 2.0 per cent during its August meeting today.
The news was widely expected by analysts as the RBA waits for business and consumer confidence to improve following its rate cuts in February and May this year. With the Australian dollar at more acceptable levels, the RBA is taking a wait-and-see attitude to see if the economy lifts before it decides to shift rates again, with many analysts speculating about the possibility of further rate cuts later this year.
As a result of APRA's increased supervision, the big 4 banks have already moved to increase interest rates on property investment loans. We expect that many other lenders will also be increasing their rates in the coming weeks, with rises varying between 25 and 50 basis points depending on the lender.
Even though there have been some rate rises and restrictions on property investment loans, rates are still great and other home loan rates are still at all-time lows. It's a good time to be in the property market - whether you're looking to invest, refinance, buy your first home or are opting for a sea change.
We're here to help you get the very best loan available for your personal financial situation and goals, so please give us a call today. We're also happy to help if you have any questions about APRA's increased levels of supervision on mortgage 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 steps to limit it.
In response, lenders are tightening their lending criteria for investment borrowers.
A separate newsletter detailing the above was sent to all our clients in an email this morning.
Some of the changes include:
Yesterday, AMP made a decision to cease all new investment lending until further notice.
Other lenders like NAB and ANZ are intending to increase their existing investment loan interest rates slightly.
This action by APRA does not affect owner-occupied home loans.
The lenders in the last few days have been sending us communication with the proposed changes and I shall be sending each of yourselves that have existing investment home loans, a summary of changes applicable to yourself.
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