Lenders making significant changes – they will effect borrowers
Over recent months “The Murray Report”, APRA, ASIC, RBA and numerous others have been examining the property market, the finance industry and the economy. Their concerns are varied and include, but not limited to:
- “over heated” property market;
- the level of foreign investment in residential property:
- impact of increasing volume of sales to property investors;
- viability of SMSF property investment;
- the liquidity of the banking industry;
- housing affordability.
Whilst there has not yet been any regulatory changes, there has been a lot of commentary from various “experts” and discussions between lenders and respective regulatory bodies. As a result some lenders have sought to get ahead of the game by implementing significant changes to their loan assessment criteria and how they offer finance for owner occupiers as distinct from property investors.
Some of the changes which have occurred in the last 4 weeks include:
- one lender ceasing to provide SMSF loans for residential properties;
- some lenders have commenced charging higher interest rates for finance for the purchase of investment properties than for owner occupied properties;
- some lenders will not negotiate additional interest rate discounts for investment finance but will continue to do so for owner occupied finance:
- increased loan affordability assessment criteria;
- introduction of minimum liquidity requirements for SMSF finance;
- lenders removing incentives (i.e. $1,000) for investment finance.
The above are expected to be the first of several changes over coming months. Their immediate impact will make qualifying for a loan more difficult.
These changes make it even more important for people to explore offerings from several lenders, as the variance between lenders in interest rates, fees and lending criteria is widening.
Note: Those holding finance pre-approvals should have them re-approved as lenders will re-assess a persons qualifying criteria under their new rules when they find a property.
Please do not hesitate to contact me if you would like to discuss these changes in more detail or you would like to run a specific scenario past me.