In a most unusual month of lending policy implementation by the banks, many responsible investors were left shaking their collective heads.
A further interest rate cut by the Reserve Bank resulted in Australian Prudential Regulation Authority (APRA) stepping in to demand that banks reduce the level of investment lending growth to less than 10 percent per annum.
This has resulted in a number of different measures being taken by banks including:
- Interest rate discounts of Standard Variable reduced
- Decreased Loan to Value ratios
- Removing negative gearing from loan calculators
- Increased qualifying rates
- Higher interest rates for investment loans compared to owner-occupiers
Over the longer term, APRA has indicated they will introduce regulation that will require banks to carry more capital against their mortgage loan books putting pressure on margins.
From all of this it is wonderful news for owner-occupiers who now enjoy the lowest interest rates in 40 years and whose business the banks will continue to pursue vigorously.
When the banks say “no” the non-bank lenders say “let’s go”
As has occurred numerous times in the past the non-bank lenders will step up to fill the void left by the banks conservative approach.
An example of this was a loan we arranged last week for an investor at 90% LVR with no mortgage insurance.
Everything comes at a cost and the loan does have a higher rate and a risk fee but the investor can continue their property investment strategy uninterrupted.
Fortunately, non-bank lenders will continue to offer alternative products to continue to claw back market share that the banks hijacked from them with misinformation during the GFC.
As always please contact me directly on 0409 02 99 22 to discuss your borrowing requirements and I’m sure we can work out an appropriate strategy together.