July 30, 2015
It’s been a bumper year for property investment, with 37% of new property loans being accounted for by investors.1
In a bid to hose down speculative property investment and help property price growth settle to more sustainable levels, the Australian Prudential Regulation Authority (APRA), has set new expectations in relation to investment lending.
Australian lenders have begun to tighten their investment loan criteria following guidelines released by APRA, which oversees the activities of banks, credit unions and building societies.
These new guidelines include:
• Warnings to lenders to not increase investor loans by more than 10% annually;
• Tighter approval criteria for investor loans;
• Firmer controls over foreign investment loans.
Lenders have responded in a variety of ways. Some have removed or reduced interest rate discounts for investors while others have lowered their loan to valuation ratios, meaning investors will need a bigger deposit.
With each lender responding differently, it’s impossible to offer a one-size-fits-all statement about how investors will be impacted by APRA’s guidelines. What I can say with certainty is that now is the time to seek expert advice.
If you’d like more information about what’s happening in the market and how these changes may affect your investment plans, please don’t hesitate to give us a call on 03 9432 6070 or click on the 'contact us online' tab at the top of this page.
1.APRA media release: APRA releases quarterly authorised deposit-taking institution (ADI) property exposures statistics for March 2015, 26 May 2015 at http://www.apra.gov.au/MediaReleases/Pages/15_12.aspx