Under the watchful gaze of the Australian Prudential Regulation Authority (APRA) and in reaction to surging investment property growth on the East Coast several banks have this week brought in measures to withdraw extra discounts, decrease borrowing capacity and lower loan to value ratios (LVRs) on investment lending.
On an annual basis, investor loans were up 20.9 per cent rate which was more than double the 10 per cent limit identified by APRA regulators earlier this year, so in response the banks have put into place their own macro prudential reform to slow this down.
Practically what this looks like across the major banks?
- NAB have flagged a reduction in the discounts offered to property investor loans following the APRA request to keep investor loan growth below 10% per annum.
- CBA announced reduced pricing discounts offered on investor loans, while stressing heavier discounts very much remain available for Owner Occupied lending.
- ANZ will only offer advertised rates for customers with investor only lending and discretionary pricing will be not be available. However for customers with existing owner occupier lending with ANZ, the bank will offer discretionary pricing on investor loans.
- Westpac have also cut investor loan discounts in line with the other banks, and also increased the benchmarks in which income is stress tested to wind back maximum potential borrowing capacity to where it was benchmarked previously.
- Bankwest has made it the hardest for investors to secure loans as APRA’s campaign on lending standards is taking effect. Bankwest will now apply a maximum LVR of 80% for investment purposes, a departure from the bank well known for accepting investor loans up to 98% LVR.
So what does this mean for you?
Don’t panic. Existing investment loans will still be honoured as per your original contracts. Smaller banks, mortgage managers and building societies have not all fallen into line with the larger banks as their growth wasn’t as investor focused previously so there could be other options on the table from other lenders.
We have access to smaller lenders and regional banks that will still look at high gearing and substantial discounts on investment loans, so if you need any help with this make sure you give one of our experts a call to discuss on 1300 88 73 28 or contact our team.