Changes / tightening on servicing for investors

Discussion in 'Property Finance' started by Marty McDonald, 8th May, 2015.

  1. Marty McDonald

    Marty McDonald Mortgage Broker Syd

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    So far we have had the following:

    * Westpac group - Max 70% LVR for non residents.
    * Westpac group - Increase their buffer on all new and existing Westpac loans.
    * Macquarie - reduction in servicing for capacity for IO loans.
    * AMP - no more taking other banks debts at actual repayments. This is a big one.
    * AMP - no more 100% of rental income taken but now will use negative gearing.

    Any others?
     
  2. Redom

    Redom Mortgage Broker

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    I believe Macquarie's servicing calculator no longer refreshes after 6 months. Their cash out policy was tightened a while back too (5% of security value above 80%).

    This is reasonably big too, but not very unexpected.

    Good thread Marty. :)

    Cheers,
    Redom
     
  3. jerrybee

    jerrybee Member

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    One of the biggest CG properties I have is with Bankwest...I hope they stay put for a little bit longer. I can't draw more equity until the next FY.
     
  4. Peter_Tersteeg

    Peter_Tersteeg Finance broker/strategist

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    I think we're only seeing the start of it. I think it's about to get very tough for investors in the near future, there's more policy change rumours around that are looking very nasty.
     
  5. jerrybee

    jerrybee Member

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    What does this mean, if you're over 80% LVR then you can only draw a maximum of 5% equity from the total value of your property?
     
  6. albanga

    albanga Member

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    Looks like we are all going to have to turn into property developers.
    Buy 1 house, build 3, sell, rinse and repeat.
     
  7. Marty McDonald

    Marty McDonald Mortgage Broker Syd

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    reminds me of 2009 -2010
     
  8. D.T.

    D.T. Property Lookerafterer

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    Since they can't regulate the property markets via interest rates, as they have to reduce due to more macro level stuff going on, I think we'll see it regulated via tightness in lending.

    Wouldn't be surprised if LMI gets the boot or at least gets much harder to play with.
     
  9. Propertunity

    Propertunity Real Estate Buyers Agent

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  10. Redom

    Redom Mortgage Broker

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    This would surprise me.

    We don't have a high LVR problem with the proportion of 90%+ loans relatively low.

    In the regulators eyes, we have a problem with a disproportionately high level of investor activity, likely to be fuelled by exuberance, and the non amortisation of loans.

    What they're doing seems to target the two problems - assessing I/O loans at higher benchmarks or charging higher prices, AND, tightening serviceability calculators for people who own multiple properties.

    Cheers,
    Redom
     
  11. Marty McDonald

    Marty McDonald Mortgage Broker Syd

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    Yes that's right. So if you are at 70% LVR presently and wanted cash out then maximum LVR you could go to would be 85%
     
  12. Redom

    Redom Mortgage Broker

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    Anyone recall what happened in 2002-04 with regards to lending market policy? Pretty sure it was an investor boom with very fast price growth.

    I believe the regulators have talked about their experience in cooling a boom, citing this period.

    It was coupled with a few rate rises so that would've done the trick, but apparently the precursor was lending policy tightening. Pretty hard to get a gauge for this by looking at public information though.
     
  13. remingbi

    remingbi Member

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    Hi guys
    1.With westpac tightening their buffer, r they on par with anz now in terms of servicibility
    2. With i/o loans with macquarie what did they do to tighten servicibility
    Thanks in advance
     
  14. jerrybee

    jerrybee Member

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    Ok thanks, interesting...what did it used to be? How much of a change is this exactly?
     
  15. Peter_Tersteeg

    Peter_Tersteeg Finance broker/strategist

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    Fun times!

    Half the industry quit in frustration. Lenders eventually realised they'd over compensated, they adjusted back and those left standing have never been busier.

    Seriously, all this is going to be very tough for investors, but it's going to be a great opportunity for those who can take advantage of it.
     
  16. jerrybee

    jerrybee Member

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    How long did it take for them to begin loosening up again?
     
  17. Marty McDonald

    Marty McDonald Mortgage Broker Syd

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    I started in 2003 but can't really comment on bank policy changes at the time because it was all so new to me and I had no historical context. What I do remember was the NSW vendor duty tax was a major contributing factor to cooling things down in Sydney (I was in Canberra) along with rate rises in November and December 2003.
     
  18. Marty McDonald

    Marty McDonald Mortgage Broker Syd

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    Really not until 18 months ago but has been a gradual tweaking at the edges mainly. The cash out things is big indicator IMO. When this gets tough everything is tough.
     
  19. jerrybee

    jerrybee Member

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    wow...that long...?? :(
     
  20. Highlygeared

    Highlygeared Highlygeared

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    More importantly I'm wondering what this will do to the property market in the next 12 months and beyond - both in terms of growth and rents. Here's my (probably worthless) forecast :

    - CG rates across the country with the exception of Perth and Darwin will remain positive (between 1-7%) given record low interest rates and
    - (HOPEFULLY) rents will start to rise starting later this year up to 10% over the next 2 years)