Investors struggling with lender policy changes

Recent changes to investment lending policy and pricing is starting to impact property investors, new data has revealed.

May 27, 2016

Recent changes to investment lending policy and pricing is starting to impact property investors, new data has revealed.

According to Mortgage Choice's annual Investor Survey, 33% of respondents said the policy and pricing changes being made by Australia's lenders had forced them to alter their ‘investment plans'.

“Over the last 16 months, most of Australia's lenders have been forced to tweak their policy and pricing in order to stem their level of investment lending growth,” Mortgage Choice chief executive John Flavell said.

“These changes have ranged from the removal of discretionary pricing on investment lending all the way through to loan to valuation restrictions.

“Understandably, these changes are starting to have an impact on some property investors.

“According to our data, the changes have even encouraged some property buyers to put their property plans on the backburner – information that is supported by the latest research from the Australian Bureau of Statistics.”

Data from the Australian Bureau of Statistics shows the value of investment loans written each month has fallen approximately 10% since December 2014 when the Australian Prudential Regulation Authority first announced its desire to cap investment lending growth at 10% for all lenders.

For those who haven't shelved their investment plans and have actually purchased an investment property over the last 12 months, data from the survey found 32% of respondents described the process of obtaining finance as “difficult”.

“Of course, these respondents probably didn't go through a mortgage broker,” Mr Flavell said.

“While a lot of lenders have made some significant changes to their investment lending policy and pricing over the last 12 months, there is still a lot of opportunity for property investors.

“Both interest rates and rental vacancy rates are currently sitting at record lows. In addition, all the latest research suggests property prices continue to climb at a fairly steady rate – all of which is great news for investors.”

According to data from CoreLogic, property values climbed 1.7% across the combined capital cities over the month of April – taking prices 7.3% higher for the 12 months to May.

“This suggests the property market still represents a sound investment option for buyers,” Mr Flavell said.

“For anyone who is concerned about the recent pricing and policy changes and how they may impact their investment plans, the key is to speak to a mortgage broker.

“Your local mortgage broker can tell you which lenders are products are available that will suit your needs.”

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