In recent weeks we have seen Australian banks tightening investment lending rules as a result of expectations set by the Australian Prudential Regulation Authority (APRA).
APRA expect the following:
- Owner occupied home loans have principal & interest repayments rather than interest only payments
- Investment loan approvals to grow more slowly
- Tighter control over foreign investment loans
APRA is giving lenders control over how they achieve these goals and this is resulting in a number of different approaches.
In recent weeks, we have seen various changes by lenders:
- some have stopped offering discounts for investment loans
- some are offering better discounts on owner occupied loans
- some now require borrowers have a 20% deposit for any investment loan
- some offer bigger discounts to people with bigger deposits
- some have started to price loans with principal & interest repayments cheaper than interest only loans
- some have tightened up their "how much can you borrow?" calculators so investors can borrow less than owner occupiers
- some are yet to make any change
This has made the home loan market more complicated as every lender has adopted completely different approaches to achieve APRA's expectations.
None of these changes will have an impact on existing borrowers at this stage. However next time you request a change, or try to restructure an existing loan, it will be a different experience.
If you are thinking of refinancing, moving home or want to invest in property, it is more important than ever that you consult your Mortgage Choice broker to understand how all of this effects you.