Investment Lending

What’s happening in the world of finance for investors?

In the past few weeks, 2 lenders, CBA its subsidiary Bankwest as well as AMP have all announced that they will not be accepting any further refinance applications for investment loans. Lenders have recently been hit with a proverbial stick from APRA (Australian Prudential Regulation Authority) and told to restrict the amount of investment lending they are doing.

December 2016 saw a 0.8% increase in investment lending growth which doesn’t sound like a lot however if that figure is annualised, it gets very close to the 10% growth mark which is the speed limit that APRA enforces in an attempt to keep the property market from overheating, particularly in capital cities like Sydney and Melbourne where prices continue to push higher.

Lenders will be forced to adjust their portfolios if they have too much investment lending and may look at different ways to do this. We have already seen restrictions from lenders placed on investors over the past 2 years by decreasing the amount of rental income and negative gearing benefits they can use for servicing as well as increasing the assessment rates for existing and new loans.

What does this mean for me?

As an investor, it is important to have a mortgage broker on your team who understands your investment goals and can assess your overall situation. By refinancing your loans, you may be able to reduce your repayments and unlock equity to be able to buy more investment properties. If you have been thinking about buying another property or refinancing to create more cash flow, it’s better to do it sooner rather than later as we may see investment lending faces more and more restrictions over the next 12 months. There are a few banks that are still welcoming new investment loans and are even offering a cash incentive of between $1000-$1500 to new customers.