Bank lending is cooling off; what does this mean for you?
This is a must read if you:
· Have an existing variable mortgage
· Have an investment property
· Are looking to sell your investment property; or
· Are looking to buy an investment property.
As a result of the current economic environment, the Australian Prudential Regulation Authority (APRA) has decided to cool investor lending for real estate, recently pinpointing it as a risk driven pursuit.
The APRA has instructed lenders to limit their investor lending growth to 10 per cent per annum. This is aimed at taking the heat out of the Sydney and Melbourne markets, but will affect the Perth investment market, as it will become more difficult for investors to obtain finance. This will mean differential loan pricing for owner-occupiers and investors. Some lenders have dropped out of the investor market altogether, whereas the remaining banks and financial institutions will have changed their lending criteria in varying degrees for existing, as well as for new customers.
According to Paul Gregory of Ethical Home Loans, interest rates are increasing by up to .42% for existing investor loans and new investor loans have increased by an average of .27%. Paul also points out that the full effect of these changes are yet to be seen.
The stricter criteria has also resulted in Loan to Value Ratio (LVR) and Interest Only repayment restrictions for both owner occupied and investor lending. In other words, your variable interest rate may have increased even if you have an existing mortgage on an investment property.
If you are an investor and are looking to sell your investment property in the near future, you should consider how these changes will affect the sales price of your investment, especially if you have a current tenant on a long lease.
If you are unsure of what these changes mean for you and to discuss your situation in detail, please click here .
You may find it is time to review the financial state of your existing and new property investments.
As a mortgage broker, Ethical Homeloans are dedicated to providing quality service when looking for a home loan, investment loans or even if you’re looking at refinancing.
There is NO additional cost to you for utilising our personalised Mortgage Brokering service. Ethical Home loans work only with qualified and licensed brokers. Ethical Home loans is paid by the banks with our fee not being included in your interest rate or fees. In other words, we offer the same products, rates and fees as if you were to go the bank direct, but at Ethical Homeloans can assist with over 25 Banks and credit Unions.
Contact Ethical Home Loans here or contact Paul Gregory on 0411 072 626.
Readers should always seek their own independent advice prior to making any decisions regarding property or finances.