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Housing investor loan cap ‘reaching end of useful life’: APRA

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The banking regulator has signalled it could ditch its 10 per cent cap on lending to property investors as the measure is “probably reaching the end of its useful life”.

Smaller lenders have criticised the 10 per cent cap for holding back competition.

The marketplace would welcome APRA addressing the cap’s current settings in order to improve competition, which will ultimately benefit the consumer.

Under pressure from regulators, banks have also in recent years overhauled their systems for assessing customers’ incomes, their debts, their cost of living, and their sensitivity to higher interest rates.

Now is the perfect time to seek professional advice if you are considering property investment.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Competition heats up among lenders for first home buyers and investors

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Softer conditions in home lending are prompting the country’s banks, whose loan portfolios are dominated by residential mortgages, to target growth opportunities in specific customer segments, including property investors and first home buyers.

Under the Australian Prudential Regulation Authority’s rules to dampen the housing market, no more than 30 per cent of new bank home loans can be interest-only, and banks’ housing investor loan books can grow no faster than 10 per cent.

The big four banks are now all well below these caps after various moves to increase interest rates and tighten credit.

Now is a great time to invest in property and source a great financing package in a highly competitive marketplace.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Business Lending Conditions

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Competition among lenders appears especially acute in the commercial property loan market. Financiers are becoming more and more selective in choosing who they deal with, and within what markets they are prepared to lend.

Business lending conditions continue to create challenges along with demand for credit.

It is extremely important to understand which financiers are prepared to lend in your chosen market, and under what terms and conditions.

Recent changes to financier appetite is a direct response to perceived risks associated to individual market segments. Despite the recent targeted adjustments, banks remain vigilant in ensuring that their risk appetite and lending practices are appropriate: risks in residential property development and other commercial property markets continue to build.

Now is the time to review your banking relationship and ensure your financier is keen to support your business in the short, medium and long term.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Australian Economic Indicators

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In an ever-evolving financial market place, it is important to keep informed and up to date.

Australian economic indicators remain sound with growth picking up more recently.

Momentum in the labour market has improved. Strong employment growth has been recorded over recent months, although wage growth remains low by historical standards.

Economic conditions continue to vary across the states, with the New South Wales economy performing strongly, and there are signs that economic conditions are starting to improve.

Conditions in the established housing market remain strongest in Sydney, which is consistent with better economic growth expected in coming months.

Are your financial circumstances positioned to take advantage of current sound economic conditions?

– Carl Thompson – Commercial Lending Specialist, Strategic Investor Group