Dear Fellow Investors,
Welcome to the July/August edition of our investors prime newsletter!
The big news in July was that Australian Prudential and Regulatory Authority (APRA) has cracked its whip and advised authorized deposit-taking institutions to reduce their investors mortgage portfolios growth “materially above a threshold of ten per cent”, otherwise it could force the imposition of formal credit sanctions of these lenders. One way that APRA could achieve this is to raise capital levels for any banks that do not maintain a prudent approach to residential lending.
Holding more capital on reserve would mean that the banks bottom line profitability and this could have a negative impact right across their entire mortgage portfolio, not just investment mortgages.
The impact of this was almost immediate, as a number of Key lenders modified their interest rates and lending policies to curtail their investment loans, so as in the famous Bob Dylan song, ‘The Times They Are A-changing’, as it seems, but are they really?
The finder.com.au analysis of data from the Australian Prudential Regulation Authority (APRA), released on July 31st shows that 16 banks have grown their investment home loan lending by more than 10 percent in the past year to June 2015, including three of the four major banks: ANZ, Commonwealth Bank and NAB.
Banks have collectively grown their investment lending by 16.5 percent in June 2015 compared to June 2014. Total investment loans by the 73 banks monitored by APRA has grown from $435.7 billion in June 2014 to $507.4 billion in June 2015.
Here is just a small example of some of the immediate changes that were implemented by some lenders;
- CBA and ANZ will increase interest rates by 0.27% to all investment property loans from August 10th.
- Most lenders will be removing negative gearing ‘add backs’ for investor loans, thereby making it more difficult to obtain investment loans.
- ANZ will restrict their investment loan Loan to Value Rations (LVR’s) to 80% on new loan applications.
- Bankwest, St George, Advantedge and ING have lowered their Loan to Value ratios on investor related borrowing.
- NAB, St George, CBA and ANZ will cap rental income assessments to only 80% of the rental amount, whilst other lenders will only allow 4% of the property value towards rental calculations.
- Fixed rate increases on investment property loans right across the entire industry, with ANZ and CBA leading the way in recent increases.
The most important aspect for all property investors to take away from these ongoing changes to lending policies it to understand that it going to be much harder to obtain 95% and even 90% LVR on investment loans via the major banks.
Having said that, there are literally over 100 lenders that will be more than happy to offer you more competitive lending options that those currently offered by the major 4 banks, and that’s why it’s more important than ever for you to source the very best mortgage broker, who can work with you long term, and one that can maximize your ability to source the right funding based on your specific circumstances.
Remember hat the major 4 banks control 85% of all residential mortgages and all the others are literally competing for the remaining 15% of the market. With overall interest rates at 50 year unprecedented historically record low levels, in my opinion it’s never been a better time to secure an investment property.
So don’t wait to buy an investment property, buy an investment property and wait.
That’s my two cents worth on the recent changes to lending policies!
NEW WEBINAR RECORDING
Just in case you missed my last webinar, here is the recording link;
Here is the Link to the recording;
Here is a quick recap of what was covered;
By watching this unique webinar, YOU’LL LEARN 6 WAYS TO BUY PROPERTY WITH NO MONEY DOWN.
- 10% Deposit rebate from the developer at the settlement of the property.
- 10% Gifted deposit from the developer when buying property.
- Getting 100 per cent Finance, and influencing the Valuation Process.
- Residential Lending plus Personal Loans in order to obtain 100 percent Finance.
- Equity Partners and Joint Ventures (JV’s)
- Long Term Settlement, Off-The-Plan and Settling on the Valuation, not the Contract Price.
And here is the really cool part of this webinar:
Not only did I cover each one of the 6 above topics in great detail, I also showed actual deals that I have personally put together for some of my private clients this year.
So make sure you watch it before I take it down in the next few days.
That’s all from me, till next month!
Investors Prime Real Estate
Level 1/181 Bay Street, Brighton, VIC 3186