September 23, 2015
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?
In theory, these changes would 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 problem 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 about existing property investors?
If you already have an investment property, you may find you soon (depending on you lender) have to pay a higher interest rate, as some of Australia's banks have increased the interest rates on their investment loans.
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.