Why banks and lenders are tightening lending rules
In just the last 2 months, banks and non-bank lenders have responded to APRA’s (Australian Prudential Regulatory Authority) restrictions to lending to property investors. The major banks must now limit their total spending on such investment at 10% per annum.
SydneyLinks’ Trisiana Muljono says banks have all reacted differently to this lending cap to prevent breach of APRA’s new growth limit.
“The changes prevent the current market from growing organically,” says Trisiana. The change itself is a sudden stop to what has been a steady growth rate, increasing at a greater rate than the new cap.
Popular among investors, Potts Point's new Omnia development.
“There are a variety of different ways the market has responded and different banks have established different criteria for lending,” says Trisiana. Such methods as higher interest rates for new investment loans, reduction of annual rental incomes and increasing servicing assessment rates are just some of the methods put in place for lending criteria.
A clear change is the obvious difference between owner occupied loans and investments loans. “The best thing to do is to act fast for any new investors,” she says. This may also be a great time to review current loans and see how these changes might be affecting you.
The SydneyLinks team
194 -196 Victoria Street Potts Point NSW 2011
02 8302 3000