Lending for investment properties appears to have suddenly tightened, as the banking regulator’s efforts to rein in the sector appear to be succeeding.
Credit conditions in Australian housing lending market have become a lot tougher in the past two weeks with banks cutting discounts on investment loans and demanding tougher scrutiny on borrowers’ ability to repay their debts.
Lending to property investors is now growing at 21 percent year-on-year, more than double the so-called speed limit of 10 percent identified by the Australian Prudential Regulation Authority (APRA) earlier this year.
Anecdotal evidence is that NAB, Commonwealth and Westpac investor loans will no longer offer additional discounts over and above the published ‘package discount’ rate.
APRA has now pushed up the risk weighting capital requirements of the big banks closer to those of the smaller players, rather than let the smaller lenders’ capital buffers fall back to those of their larger rivals – meaning loans will cost the banks more money, which will be passed onto borrowers.
In recent weeks Australian banks have endured their sharpest sell-off since the GFC, falling more than 12 percent since late March.
More than ever it is time to make sure you have a mortgage broker that is working for you, rather than you banks. Contact a Red & Co finance specialist to discuss your requirements and how we can assist with hedging you against any APRA imposed changes to investment lending before it is too late on 1300 88 73 28 or contact us here.