Lending climate shifts for property investors

Property Investors Beware: the new message for 2017.

2017 has gone off with a bang and now that the dust has settled, a new round of policy and product shake ups has hit the market.

Home Loan heavy hitters are now making policy and procedural changes that will impact all investment property owners.

From this week, there are changes with some banks that will see their customer’s borrowing capacity shrink as servicing calculators are updated to no longer allow tax benefits for negative gearing and other banks are removing the ability for non-bank customers to refinance their investment property loans unless you plan on bringing over your owner occupied property as well.

These changes are in addition to the other policy updates put into effect via a recommendation from APRA (Australian Prudential Regulation Authority) in December 2014 which included the following:

  • Tighter governance on high loan-to-valuation-ratio (LVR) loans
  • Interest only repayment options for owner occupied home loans
  • Attempts to cap portfolio growth in the investment home loan market to 10% per annum
  • Increased scrutiny on bank assessment rates which has seen a large increase in the “Floor rate” (the interest rate used to calculate affordability for banks).

The banks have taken these recommendations seriously and are now not only offering higher interest rates for investment home loan products vs owner occupied products but many are now further increasing the investment home loan interest rates when interest only repayment options are required.

The message seems to be clear to property investors, think about paying off the loan over the standard 30 year term or be prepared to pay for the privilege of interest only repayments.

However, there are alternatives. A smart investment strategy can see you build wealth AND save money. Having a team of people working for you to reach your financial goals is crucial and Curtis Financial can help play a major role in achieving those milestones.

There has never been a better time than now to review your current circumstances and plan for your future.  Curtis Financial are not just home loan brokers, we care for our clients, spend hours’ pro bono sharing advice whilst assisting families in an ever-changing financial landscape.

Contact Mathew today, whether you change your current circumstances or confirm that your current strategy is right for you it costs nothing to find out. 

Reserve leaves rates on hold to start the 2017 year

The Reserve Bank has kept rates on hold after its first meeting of the 2017 calendar year yesterday.

Reserve Bank Governor Philip Lowe citing a forecasted economic growth picking up inflation to more than 2%, up from the 1.8% from the September quarter.

The Governor also sought comfort in increased resource exports and full-time employment figures improving in the later stages of 2016.

Sydney and Melbourne housing markets are still of concern given double digit growth rates however Governor Lowe said conditions varied around the country.

“In some markets, conditions have strengthened further and prices are rising briskly. In other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Growth in rents is the slowest for a couple of decades,” he said.

The next Reserve Bank meeting is scheduled for March