How Investment Lending changes will affect you!
Some of you may or may not be aware of the recent big changes in regards to investment lending that occurred over the past few weeks. The official Australian Prudential Regulation Authority (also abbreviated to APRA) has been consistently pressuring banks into significantly limiting their investment lending growth of up to 10% each year. With historically very strong property markets and low-interest rates in both Melbourne and Sydney, many of the banks were much closer to 30% growth in the past 12 months. This big change has meant that mortgage brokers have had to become much more knowledgeable on the recent banking system changes in terms of investment lending.
This big change in investment lending has also meant that many borrowers from banks have made many individuals fearful or confused which has led them to seek professional advice from mortgage brokers such as ourselves. We can offer a significant level of professional guidance to all of our customers.
It seems each and every bank has responded individually and differently to the directive of the new changes, which means the changes in both pricing and policy have varied significantly from one lender to the other. There has also been a high level of confusion among individual borrowers and a considerable amount of concern about how current and future investment lending may be affected.
What do I do now?
Now that larger banks have made it a lot more difficult to obtain an investment loan there may be many questions that need answering. Banks have made it more difficult by raising the minimum deposit that is needed and have also increased interest rates which, therefore, has decreased the amount of investment lending which the banks will offer. Thankfully for many, larger banks aren’t the only way that you can secure an investment loan. Securing an investment loan can also be done through a reputable mortgage broker which can help you to get onto the market much faster.
Do the new APRA changes affect me?
If some of the following points below sound familiar to you, you may be at risk of being affected by some of the recent investment lending changes.
● You are a first-time investor and have planned on entering the market with a high value to loan ratio by using mortgage insurance.
● You are currently looking for an investment loan without a 20% deposit
● You are an off plan property investor and have paid a 10 per cent deposit while financing the remaining 90% of purchase price on a settlement.
● You are an existing investor who has a variable loan.
● You are an investor with multiple properties and have plans to release equity in order to purchase an additional property.
● You are an investor who possesses high levels of SMSF lending.
● You are an investor who is trying to maximise their borrowings or have plans to refinance an investment loan.
When should I seek advice from my mortgage broker?
There is no denying that there have been plenty of changes made and there are certainly more on the way, so it’s no wonder that individuals who choose to borrow are now turning to mortgage brokers for advice and information. Even though banks are only capable of offering just a single solution when it comes to investment lending, mortgage brokers can provide a wide number of solutions.
A mortgage broker who is knowledgeable on investment lending is capable of making a significant difference to your investment. Always remember, the less you plan on borrowing, the most inclined lenders will be when approving your loan application.