Australia’s lenders have made some sweeping changes to their investment lending policies of late, so what do these changes mean for you and your property investment plans?
In December 2014, the Australian Prudential Regulation Authority (APRA) announced it would cap investment lending growth at 10% for all lenders, in a bid to curb the recent surge in investor activity.
Months later, Australia’s major lenders started to implement various pricing and policy changes in order to meet their cap and stem investment lending growth.
As part of the changes, some lenders have restricted the amount of money they will lend to investors, while others have made it more difficult for buyers to prove they can service their loan.
So what do these changes mean for you if you are thinking of investing in property?
In theory, these changes should make it harder for potential investors to obtain finance to fund their property investment purchase. In reality however, if you already have other investment properties or an owner occupied home that you can use as leverage, you should have no problems obtaining finance.
If you don’t have other properties, you may find (depending on the lender you go with) that you have to have a 20% deposit. Of course, not all lenders have this rule, so you may find you can still fund an investment property with a much smaller deposit.
What do the changes mean for existing property investors?
If you already have an investment property, you may find you soon (depending on your lender) have
to pay a higher interest rate as some of Australia’s banks have increased the interest rates on their investment loans.
Despite all of the changes being made to investment lending, a recent Mortgage Choice Investor survey found the vast majority of potential and current investors (54%) won’t let them affect their future property investment plans.
Of course, if you are concerned about how the changes may affect you either now or in the future, it pays to speak with a professional.
At Mortgage Choice, we have access to a wide choice of lenders and hundreds of products, so we can help you navigate through the current investment lending changes to find the right lender and loan for your needs.