8 September 2015
Portfolio Capital - Mortgage Market Wrap
By David Harris, September 3, 2015
The last couple of months have been a period of massive change
in the home loan arena - particularly so in regards to lending for
residential investment properties. We've seen lenders pull out of
SMSF lending, withdraw from residential investment lending, reduce
lending ratios and increase interest rates for both new and
existing investment loans. Some lenders are even imposing location
based policies.
With all these changes occurring on an almost daily basis it has
never been more important to have an expert in 'your corner' to
ensure that you currently have the most appropriate and cost
effective home and investment loans or, if considering new
borrowings, that you are being presented with the right
options.
The changes we are experiencing are largely in response to the
Australian Prudential Regulation Authority's (APRA) push to kerb
the unprecedented growth in residential investment borrowing. This
is seen as a significant factor in soaring house prices -
particularly in Sydney and Melbourne. Basically, the philosophy is,
restrict the cash and demand reduces along with prices.
Of course, with interest rates at an all-time low (and with the
possibility of another drop before the end of the year) one must
ask if increasing rates by 27 basis points will be enough of a
disincentive to prospective investors. It certainly provides a
great boost to the banks' bottom lines.
Question: if it's really all about future disincentives for
investment how does increasing the rates for existing customers
play into that? Could this just be a revenue grab by our major
lending institutions?
Reducing lending ratios (loan amount vs. property value) to 80%
may be an inhibiting factor for some, however; I believe the
investor borrowing market is still predominantly driven by those
either with the 20% cash to inject or with sufficient equity in
other properties to maintain overall lending ratios at or below
80%.
Of course, whenever a market changes, either for better or
worse, a range of new opportunities always present themselves. Here
are just a few:
- If you are looking at buying an investment property you may
find that there is a little less competition out there.
- Changes like those we are experiencing at the moment create an
ideal time to review your loan portfolio. Not all lenders have been
as 'aggressive' in applying rate increases across the investor
spectrum. Is yours one of the 'less generous' lenders in this
respect? A review may save you thousands.
- If your investment loan rate has increased talk to us about
lenders who will still provide an owner occupied rate if they have
your investment AND owner occupied home loans.
- As lenders growth ambitions are curtailed (through a demand by
APRA to limit investment loan growth to under 10%) they are turning
their attention to the owner occupied home loan market. There are
currently some incredible offers out there designed to attract new
customers. Offers like 3.99% variable with full offset facilities,
comparison rate 4.19%.
Why not give us a call (07
31391372) or visit us a www.portfoliocapital.com.au for a free
consultation to see if we can save you some money on your home and
investment loans.
Also, check out our free e-booklets below.
First Home Buyers Guide
Buying and Selling Guide
Refinancing and Investor Guides will be released next month.
