In recent years the banks have been kind to investor lenders. With rate cuts from the RBA, borrowing and lending has naturally gone wild. However, banks have decided to tighten their investment loans with stricter features to reduce the amount of investors taking over the property market and stop the RBA from lifting the rates.
The new guidelines for housing investors have made loans tougher to access or too expensive. All four of the major banks have their loan-to-value ratios (LVRs) on their investor loans. What this means is that anyone looking to invest is now required to supply a much higher deposit, forcing people to reassess their ambitions.
There has been changes including the removal of mortgage discounts as well as the elimination of negative gearing from investment lending policies. These changes are intended to slow the level of investor lending, providing a more stable housing market.
Those who are concerned about their investment plans may which to speak to a financial adviser or mortgage broker prior to committing. With conflicting information about the economy, housing market and competitive rate changes, investors should attempt to research and understand the affects as soon as possible.
What the big four have changed:
ANZ – lift in variable and fixed rates for investors as well as a removal of the no interest rate discount for new property investors
Commonwealth Bank – reduced rate discounts and the removal of the $1000 rebate
NAB – no longer providing investment lending to self-managed super funds as well as a reduction in new investor discounts.
Westpac – stricter criteria for ‘non-resident’ home loans, increase in mortgage rates and a reduced discount for potential investors
Other lenders have also followed suit with increases in their variable and fixed rates and capping investor LVRs at 80%.
First home buyers could be the winners
Through these changes, investors may begin to lose confidence in the marketplace, forcing more and more to sit on the sidelines. This will allow first home buyers with more opportunity to purchase property, leading to the market changes regulators are hoping for.Back « Seven simple rules for first home buyers
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