July 13, 2017
Investment lending changes by Australia's lenders are increasingly affecting the property plans of investors, according to new research.
Mortgage Choice's annual Investor Survey found 42.6% of Australian investors said new investment lending restrictions were affecting their property investment plans – up from 33% the year prior.
“This finding does not come as a surprise when you look at the current environment we are in,” Mortgage chief executive officer John Flavell said.
“Over the past couple of months, we have seen a number of Australia's lenders introduce a raft of changes in relation to investment lending.
“Some lenders have changed their policy, making it harder for would-be investors to qualify for a loan, while others have modified their pricing by lifting their interest-only home loan rates.
“These changes can be largely attributed to the Australian Prudential Regulation Authority's (APRA) decision to crack down on investment lending.
“In December 2014, APRA announced its plans to cap investment lending growth at 10% for all lenders.
“Following that decision, many of Australia's lenders were forced to tweak their policy and pricing in a bid to cool the level of investor interest.
“Then, in March 2017, the regulator wrote to all lenders and informed them that interest-only loans must be restricted to 30% of new residential mortgage loans.
“As our data shows, this spate of investment lending changes are starting to affect property investors. Some investors are forced to look beyond their traditional lender in order to obtain finance, while others are choosing to reassess their intentions to buy a property and/or put their plans on hold indefinitely.”
Looking ahead, most Australians believe the investment lending changes will force additional property investors onto the sidelines.
According to the Investor Survey, 51.5% of Australians said there will be a reduction in the level of investor activity over the coming 12 to 24 months.
“In light of the current market and all the changes taking place, I am not surprised to hear that the majority of Australians believe investor activity will drop over the coming 12 months,” Mr Flavell said.
“Australia's property market has become increasingly complex in recent months. In my 25 years in the finance industry, I have never known the mortgage market to be this complex and confusing.
“But while there are a lot of changes afoot, there are still plenty of opportunities for investors.
“There are still a number of lenders in the market who are happy to write investment loans and are hungry for this type of business.”