Monday, 30 September 2019 06:39   |   Read 68 times

In late 2014 the Australian Prudential Regulation Authority (APRA) attempted to curb the high competition in the Australian housing market, that locked out many first home buyers, by keeping a close eye on a suite of concerns, including the levels of residential lending to investors.

APRA’s communications at this time flagged an increased focus on:

  • Higher-risk lending
  • Serviceability assessments including interest rate buffers
  • The rate of growth in investment lending

Lenders were strongly encouraged to restrict their investment lending to 10 per cent growth. APRA explained that the aim of the threshold was not to target specific loan types, but to pay more attention to the cause of imbalances in the housing market: strong growth in investor lending.

The Reserve Bank of Australia reported in its Financial Stability Review that direct risks to financial institutions would increase if high rates of lending growth persisted or were to increase further.  Following this report, in order to avoid the scrutiny of APRA, the major banks took action to slow their rates of investment lending, which would also lead to mandated lending caps and a potential need to hold increased capital against mortgage risk.

At the time ANZ Bank announced that they are no longer offering discount interest rates to new property investors who didn’t already have a mortgage over their own home with the bank and both Commonwealth Bank and National Australia Bank narrowed discounts applied to new investor borrowers.

What this means for investors

Fast forward a few years and while there have been investment lending growth targets set, the property market has continued to rise, however, we are seeing some moderation in that growth rate now.

While investment lending is now not as simple to secure as it has been, it is by no means impossible, and Aloha Loans have access to a large panel of investor-friendly lenders who are well placed to help. If you want to know more then please contact us on 02 9614 0888 or through our website

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