Changes / tightening on servicing for investors

so once everyone has maxed out the banks and adelaide bk and firstmac, is there an option of using other non deposit taking financial institutions such as for e.g.
1. liberty financial
2. la tribe financial
3. resi home loans
4. pepper home loans
5. wide bay australia

there rates r likely more expensive, but how do they rate on a serviceability of ofi debt, and their own debt?

thanks

Resi is largely funded by NAB via advantedge so no go there . Wide bay recenlty rebranded as Auswide Bank I think, and I expect they will have the same issues

the balance are lender that you really dont want on your CRAA (liberty and pepper esp, since they are seen as lenders of last resort)

Having said all that, borrowers that want to grow will need to do what they need to do, the firnge lenders are exactly that in terms of volume and have neither the cash nor the process to soak up what the bigger lender have been asked to leave on the table.

ta
rolf
 
SunCorp is not the only bank I use....I also have over $900k with WBC, CBA, St and George.

I have revalued all securities with SunCorp and have sucked out all equity up to 80%..where possible. That includes the profit from the completed construction loans.

It's great that you're in a position to take advantage of their competitive rates for that amount of money. When you maxed out with Suncorp, were you still able to borrow more from other lenders? What happens now if you need to access equity and most of your equity is in one of those properties already held by Suncorp?
 
ABL will last approx 2 to 3 weeks t best so get those loans in, bit of a personal pity thing, they were one of the first I wrote loans for back in the late 90s

Genworth and QBE are pretty much hopeless ( ie decline for a first response) as direct insurers for anyone with a decent portfolio that makes too much rent.

I've been told (by Adelaide) that they'll be making policy changes within the next few weeks.

I suspect that lenders such as Adelaide, Macquarie, etc will continue to fund aggressively via mortgage managers, even when they can't do it directly.

The catch is LMI authorities in this sector aren't as strong, so if you're looking for LMI and an aggressive lender, you might find the lender being okay, but the insurer shutting it down. I've already said it in this thread, cash will be king moving forwards.

Most likely eventually even the mortgage managers will be quietly restricted.
 

Lol that article.

the economy has stalled, speculation on existing stock in Sydney is still happening but will cool at some point... that just needs to run its course. I don't agree that sydneysiders using their house as an ATM to import consumer durables really helps us much at all - it effectively is swapping long term foreign debt for short term foreign products.

this housing bubble is an enormous distraction from the real job of getting the economy producing something
 

Hmm interesting perspective - i'm not sure i agree. Property prices aren't all that great for the economy.

Property prices increasing doesn't lead to all that much for the economy. There are indirect effects:
1. Wealth effect promotes some consumption = good thing.

Property construction is the important driver and a large component to GDP - supply side. There is a relationship with property prices, but its not the biggest driver. Stability in prices is important for developers, but i'm not so sure the big players gamble on prices rising when making decisions to commit to developing.

Its profitable already and often much of the stock is sold upfront (shifting risk burden at the outset). Its more about obtaining access to capital.

APRA changes slow down the property price rise while allowing the RBA to continue firing injections. That may in fact assist the supply of new dwellings as it makes access to capital easier (and pricing), which should theoretically increase the returns.

APRAs just targeting those that are most risky to allow rates to stay low for longer...giving more firepower for construction.

Cheers,
Redom
 
AMP - no more taking other banks debts at actual repayments. This is a big one.

what does it mean when another bank takes debt at "actual repayments"

bit confused.
 
AMP - no more taking other banks debts at actual repayments. This is a big one.

what does it mean when another bank takes debt at "actual repayments"

bit confused.

To calculate your borrowing power lenders assess your income and then subtract your 'assessed' expenses to work out your overall borrowing power.

AMP, MACQ, NAB previously assessed the debts you held with other institutions (say your CBA mortgage) at the actual repayment you paid monthly.

Now they assess that debt you have at a buffered amount substantially higher than previously (close to double!). Therefore for those with lots of mortgage debt (typically investors), it has a large impact on borrowing power as the assessed 'expenses' have shot up dramatically.

Cheers,
Redom
 
AMP - no more taking other banks debts at actual repayments. This is a big one.

what does it mean when another bank takes debt at "actual repayments"

bit confused.

It means when they calculate outgoings for an existing debt, "Actual repayments", means they're taking the actual repayments you're making.

What many lenders (such as AMP are now doing is using an assessment rate with P&I repayments to determine the outgoings for existing debts. Between the two methods, the difference in the figures they're using for their affordability calculations can be massive.

Say you've got an existing property with a $400k I/O loan at 4.5%. Actual repayments would be about $1,500 / month.

Several lenders now assess the repayments for that loan at 7.3% P&I. The repayments they use for your existing lending outgoing is now $2,742 / month. Almost double the actual repayment.

By the lenders thinking, that's $1,242 / month that you can no longer afford to put towards the new mortgage. This simple change in policy has reduced your borrowing capacity by almost $200,000.

Hopefully this isn't a big deal for someone with one IP. Now consider someone with 10 IPs and a $400k loan over each. Their future affordability just dropped by $2M. Odds are, they can't even qualify for the loans they've got, let alone to purchase any more properties. :eek:
 
this sucks, it's not for all banks though just for amp?

i can understand they taking the repayments as p%i if its IO

About half a dozen lenders mainstream lenders had an "Actual repayments" policy. Not anymore.

There are still a few more obscure lenders with this policy but I expect they'll have to adjust their policies sooner (not later).

In the example I just outlined, repayments as assessed almost doubled. I agree that actual repayments is a bit aggressive as it doesn't leave room for rate rises but these changes are going a bit too far IMO. If rates are now low and start rising, a lot of people will mitigate their risks by fixing. A compromise between the two extremes would be far more reasonable...

... That said, I don't believe the objective is really to have a reasonable compromise for affordability in mind. The objective of the regulators is to put the breaks on investment lending.
 
I've been reading that some of the policy changes are to slow down investor purchases in Sydney. Does that mean that the banks will be more flexible on policy for purchases in other states? Or is that just wishful thinking?
 
Beachgirlie....the nobs in banking and the RBA will use a blunt instrument to pummel Sydney...instead of scalpel...the real danger is is could unravel into a bloody mess.

Having said that ...I am all for this...from a selfish perspective of course..;)

I've been reading that some of the policy changes are to slow down investor purchases in Sydney. Does that mean that the banks will be more flexible on policy for purchases in other states? Or is that just wishful thinking?
 
I've been reading that some of the policy changes are to slow down investor purchases in Sydney. Does that mean that the banks will be more flexible on policy for purchases in other states? Or is that just wishful thinking?

The lending restrictions haven't really been Sydney specific and other states of felt the consequences. I think ING is the only one with any real Sydney specific policy.

Also the stats don't show much of a dent in appetite.

You don't need to be a neurosurgeon to figure out that there more changes from APRA to filter down considering this all started in September/October last year.
 
Thanks Shahin. By the way congrats on being one of the finalists for the broker awards.

Lol Sash. I'm not buying in Sydney at the moment so it wouldn't bother me too much if lending tightening was only done here
 
ANZ have now joined the party with some relatively modest tweaks to their servicing calc.

Previously they added 2.25% to your actual rate when assessing capacity. Now it will be 2.75%
 
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