Changes / tightening on servicing for investors

[Peter_Tersteeg]

Someone somewhere is always using the 'B' word to describe the property markets...

I don't necessarily disagree, but the RBA saying they can still drop rates further and warn the public that the market is in a bubble. It's one of their own making.

 

[jpcashflow]

Hi

Hi All,

Banking / Lending criteria always changes, I was talking to a mentor of mine today. He has various interest in different business and he has said that over the last 30 years he has seen things change.

Banks get tight, banks get loose, banks get tight and banks get loose. Some business do well and some do bad.

There are allot of people who may have 80% LVR loans but the one of the fundamental issues is that equity is used to cover the 20% plus closing cost, so in truth LVR are much higher.

Lending will get tighter but there will be opportunities!!! When things get tighter there is more money to be made.

 

[eternit]

I think its all part of a cycle. It would make sense for things to get tighter, which will push the prices down slightly or stagnate for few years. Also as things get tighter there will be upward pressure on rents, this will give rents a chance to catch up again. All part of the cycle. Once the rents catch up, investments will become more appealing again.

 

[Shahin_Afarin]

Bankwest changes:

The following changes will apply to all new applications, pre-approvals moving to formal approvals and applications being re-assessed for a material change.
The maximum Loan to Value ratio (LVR) will be 80% for any loan for investment purposes, including the purchase of shares.

The maximum 80% LVR will apply to ALL loans in an application that contains a loan for the purpose of investment.

Special pricing on Complete Variable for any loan where the primary purpose is investment will no longer be available. Special pricing on Complete Variable for owner occupied purposes will remain.

onwards and upwards......

 

[Rolf Latham]

Bankwest changes:

The following changes will apply to all new applications, pre-approvals moving to formal approvals and applications being re-assessed for a material change.
The maximum Loan to Value ratio (LVR) will be 80% for any loan for investment purposes, including the purchase of shares.

Doesnt surprise me that bankwest still havent learnt what "moral hazard" means.

ta
rolf

 

[jerrybee]

Bankwest changes:

The following changes will apply to all new applications, pre-approvals moving to formal approvals and applications being re-assessed for a material change.
The maximum Loan to Value ratio (LVR) will be 80% for any loan for investment purposes, including the purchase of shares.

The maximum 80% LVR will apply to ALL loans in an application that contains a loan for the purpose of investment.

Special pricing on Complete Variable for any loan where the primary purpose is investment will no longer be available. Special pricing on Complete Variable for owner occupied purposes will remain.

onwards and upwards......

Does this mean they don't allow over 80% even with LMI?

 

[Shahin_Afarin]

Doesnt surprise me that bankwest still havent learnt what "moral hazard" means.

ta
rolf

The technical term is "kick to the go-nads'.

 

[Shahin_Afarin]

Does this mean they don't allow over 80% even with LMI?

Yesaroonie posatoonie.

 

[tobe]

Macquire doing the same with investment pricing.

Had a response for a pricing request to NAB, where an investment security was being used to raise the deposit for a PPOR purchase.

'as the security is investment, this portion cant be considered for discounted pricing'.

Having it both ways again.

 

[Jess Peletier]

Bankwest changes:

The following changes will apply to all new applications, pre-approvals moving to formal approvals and applications being re-assessed for a material change.
The maximum Loan to Value ratio (LVR) will be 80% for any loan for investment purposes, including the purchase of shares.

The maximum 80% LVR will apply to ALL loans in an application that contains a loan for the purpose of investment.

Special pricing on Complete Variable for any loan where the primary purpose is investment will no longer be available. Special pricing on Complete Variable for owner occupied purposes will remain.

onwards and upwards......

Bankwest - who even cares It's actually great, as it will discourage investors from even looking at them which is a win in itself.

 

[devank]

Soo.... Who is giving discount on variable rate for an investment loan now?

 

[see_change]

Soo.... Who is giving discount on variable rate for an investment loan now?

And at what rates ? For standard and basic variables ?

Any discounting ?

If IP's are limited to 80 % , do the brokers feel this maybe a factor in putting the brakes on Sydney .

People who are buying in Sydney , are they borrowing to the limit or being relatively conservative ?

One wonders what impact a change in LVR's will have on OTP's . Most ( ? Majority ? Almost All ) people buy without finance in place and arrange closer to settlement time . Could this be nasty ?

Cliff

 

[Peter_Tersteeg]

Soo.... Who is giving discount on variable rate for an investment loan now?

For you, they'll probably charge extra.

Actually Bank of Melbourne sent an email last week. "We're still negotiating pricing for investors!"

 

[see_change]

For you, they'll probably charge extra.

Actually Bank of Melbourne sent an email last week. "We're still negotiating pricing for investors!"

Peter

I would have thought you'd be too busy fielding questions from clients to have a chat here , or are most of you clients somersoftians .

Cliff

 

[Jamie M]

Doesnt surprise me that bankwest still havent learnt what "moral hazard" means.

ta
rolf

Agreed. It's the wrong approach. Deals that are in pre-approval status should be honoured.

Cheers

Jamie

 

[see_change]

My initial thoughts are if it slows down the rate at which investors can buy , further down the line , it will slow down new buildings , potentially raise rents and make it easier for the RBA to drop interest rates further .

The sum would be to increase returns on those with existing IP's and as cash flow improves , those who can borrow will buy more IP's as the returns have improved ... And prices go up again. .....

So does that put us back where we started ???



Cliff

 

[Marty McDonald]

I'm reading this as a major event for new lending BUT it does give the RBA scope to lower rates further so I think it will be OK for existing investors in some regards.

Give it a few months and the lenders will start competing again once things die down a bit and APRA takes their spot light off them.

 

[HiEquity]

My initial thoughts are if it slows down the rate at which investors can buy , further down the line , it will slow down new buildings , potentially raise rents and make it easier for the RBA to drop interest rates further .

The sum would be to increase returns on those with existing IP's and as cash flow improves , those who can borrow will buy more IP's as the returns have improved ... And prices go up again. .....

So does that put us back where we started ???



Cliff

Yes, except at lower prices and higher rents than would otherwise have been the case. IMO this will severely hamper investment lending to the benefit of OOs, which is the balance APRA want to restore here. So probably a good time for PPOR upgrades!

 

[Paul@PFI]

I'm reading this as a major event for new lending BUT it does give the RBA scope to lower rates further so I think it will be OK for existing investors in some regards.

Give it a few months and the lenders will start competing again once things die down a bit and APRA takes their spot light off them.

Except APRA will seek more capital adequacy and that would affect business lending too. No bank wants to break away and be told it has to reserve more capital for a financial event. I worked in a major Bank Treasury and this same thing was done by PJK in 1992 to take heat from housing to give some stability to banking system if needed. Its probably just first stage. Next step is tightening capital adequacy and that will be slower to see,. Some aggressive property lenders will have to fix their game. May become competitive for new mortgage owner occupied and business soon.

Lending to existing owners seems to fall under the new rules. So LOC loans may be just as difficult as IP loans. Interested in seeing what the lenders do...

This is use of (non-monetary) policy to curb lending growth so that monetary policy has more effect on consumer demand and not inflating the "bubble" in some regions. ie The next 25pt cut will benefit homeowners. Watch the lenders say they cant pass on the 25pts to investors Back to the old days of a 1% margin for IP loans ?

 

[HiEquity]

Anyone seeing any changes to fixed loan rates? Rolling over 1 year fixed rates could become a viable alternative to sitting on variable rates with no discount?