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Ticking Time Bomb For Investors

Young woman shocked at the time on her watchHave you read in the news that Australian Prudential Regulation Authority (APRA) is putting the brakes on loans to property investors?

We’ve already seen some major changes in investor policy and pricing but more announcements have been made.

In the past week, we’ve been talking to the policy makers within the banks and it’s clear that these changes are just the start.

Is this the end of investment loans?

Higher interest rates.
We’ve already seen this with Commonwealth Bank (CBA) cancelling pricing requests for investment loans.

Larger deposits.
Bankwest just announced that instead of lending 95% they’ll only lend 80% for loans for investment purposes!

You can’t borrow as much.
Several lenders have changed the way they assess your borrowing power. St George has increased their assessment rate, AMP has decreased the amount of rent they use and National Australia Bank (NAB) no longer uses negative gearing benefits in their assessment.

Foreign investors won’t be able to borrow as much.
Westpac and St George recently announced that they are reducing their foreign investor loans from 80% of the property value down to 70%.

Not all lenders are making these changes!

We’ve seen the major lenders and lenders that have a large share of the investment market make changes but smaller lenders haven’t yet changed their policies.

If you need the help of a mortgage broker that specialises in investment lending then please call us on 1300 889 743 or fill in our free assessment form.

Did you buy off the plan?

A customer called us recently telling us that they had purchased six properties off the plan last year.

They asked if they would be able to get approved for a loan when their properties come up for settlement.

To be honest, we aren’t sure that they will.

If they can’t complete the purchases then they’ll lose their deposit on all of these properties and can potentially be sued by the developer for not completing the contract. Ouch.

What should property investors do right now?

  • If you own an investment property: Act now and get your interest rate checked before other lenders increase their pricing on investment loans. This may be your last opportunity to get a competitive rate!
  • If you plan to buy an investment property: Get pre-approved now! Most (but not all) lenders are honouring their pre-approvals. You’ll then have up to three months to find a property.
  • If you purchased off the plan: Please call us immediately! Our mortgage brokers can assess your situation and let you know the best course of action.

We’re specialists in investment loans.

Right now, there are a lot of changes taking place and many investors are uncertain of what to do.

If you’d like to speak to an expert then please call us on 1300 889 743 or fill in our free assessment form today.