Changes / tightening on servicing for investors

[Shahin_Afarin]

Mac is about to make the following changes:

1. Benchmark rates on all existing and other lender debts
2. Tighter cash out policies
3. HEM living expenses

So I just did one for a customer where their borrowing capacity dropped $320,000 based on the new changes.

NAB are about to make changes to the servicing calc too - very similar to point 1 above.

 

[mikey investor]

My NAB broker just tole me today that they will only consider 90% of existing rents and only 80% of new rents in calculating our serviceability.

Last week we could borrow $460K (plus our cash deposit) and today it was down to $160K.

Do any banks still include the actual rental values?

 

[Rolf Latham]

My NAB broker just tole me today that they will only consider 90% of existing rents and only 80% of new rents in calculating our serviceability.

Last week we could borrow $460K (plus our cash deposit) and today it was down to $160K.

Do any banks still include the actual rental values?

no changes that I am aware of as at 7.30 chat with credit fella on a couple of deals. insert 100 % of rent as per normal

However, there is noise on the existing liabs being keyed at 7.4 PI over 25 years, effectively bringing NAB into line with Suncorp

ta

rolf

 

[Jamie M]

Advantedge are getting on board with OFI assessment rates as of early next month......so who do we have still standing that's a "generous lender" ......

Has ABL made an announcement yet?

In a twisted turn of events...ANZ may end up being one of the generous ones!

Cheers

Jamie

 

[womble66]

In a twisted turn of events...ANZ may end up being one of the generous ones!

I think ANZ have already left the arena based on comments I heard on the ABC tonight (Roger Montgomery) and in the Australian today.

http://www.theaustralian.com.au/bus...estor-only-loans/story-fn91wd6x-1227362674847

 

[Jamie M]

I think ANZ have already left the arena based on comments I heard on the ABC tonight (Roger Montgomery) and in the Australian today.

http://www.theaustralian.com.au/bus...estor-only-loans/story-fn91wd6x-1227362674847

Yep - they've stopped "discretionary" discounts on IP rates. The other majors have too - which is funny because ANZ seem to be copping all the media.

They haven't changed the way they calculate borrowing capacity though - which was never that generous.....but in line with everyone else now :-(

Cheers

Jamie

 

[Shahin_Afarin]

Anyone that has purchased an OTP needs to talk to their brokers ASAP and make sure they are preparing for these changes. They are going to potentially require some serious buffers.

 

[hobo-jo]

So I just did one for a customer where their borrowing capacity dropped $320,000 based on the new changes.

Which is roughly how much as a % of their total?

 

[Rolf Latham]

I think ANZ have already left the arena based on comments I heard on the ABC tonight (Roger Montgomery) and in the Australian today.

http://www.theaustralian.com.au/bus...estor-only-loans/story-fn91wd6x-1227362674847

anz were never really a target anyway with their lousy servicing

ta

rolf

 

[remingbi]

would that mean we could be better off to use nab as as a lender before before west pac and cba now?
In other words the order being totally reversed?

 

[Shahin_Afarin]

would that mean we could be better off to use nab as as a lender before before west pac and cba now?
In other words the order being totally reversed?

It means we are on a rather level playing field - certainly now more than ever.

This draws the focus on other areas of lending such as policy (cash out, IO, LMI policy, etc).

 

[Shahin_Afarin]

Which is roughly how much as a % of their total?

27 percento

 

[Redom]

It means we are on a rather level playing field - certainly now more than ever.

This draws the focus on other areas of lending such as policy (cash out, IO, LMI policy, etc).

Definitely - if everyone moves to actual payments, lenders don't compete on serviceability so much and there'll be fewer players with calculators to capture the multi-property investor market.

Price may play a bigger role too if lenders can't compete on the above.

 

[remingbi]

It means we are on a rather level playing field - certainly now more than ever.

This draws the focus on other areas of lending such as policy (cash out, IO, LMI policy, etc).

Thanks Shahin
Just a few queries
1. do u know when nab will roll out its changes
2. there seems to be little benefit for existing nab customers to change from nab to the other majors earlier in the ip acquiring phase to keep nab up our sleeve later as they would have changed the way the treat ofi debt, apart from say their lousy 5yr i/o period
Is that so
3. finally after all this apra intervention is over, do u think the banks like macquarie, amp, nab may resort back to their own generous policies of the past or more likely something in between

thanks in advance

 

[windyzz]

I have 2 OTP that I bought In end of 2013 and middle 2014.. which should settle end of this year And mid next year? What does it mean... Bank won't lend money anymore? What with the smaller bank like loans.com.au, rams, ubank, firsrmac? Are they following the big banks?

 

[Shahin_Afarin]

Thanks Shahin
Just a few queries
1. do u know when nab will roll out its changes
2. there seems to be little benefit for existing nab customers to change from nab to the other majors earlier in the ip acquiring phase to keep nab up our sleeve later as they would have changed the way the treat ofi debt, apart from say their lousy 5yr i/o period
Is that so
3. finally after all this apra intervention is over, do u think the banks like macquarie, amp, nab may resort back to their own generous policies of the past or more likely something in between

thanks in advance

NAB hasn't confirmed the date but its gotta happen very soon. So if you are going to do anything with NAB (i.e. equity release) then do it NOW!

I have been literally working till 2am each night doing equity release with Macquarie and NAB.

Please understand that these changes are not a phase or a short term thing - they are Regulations and they will be here for a while. Nothing is permanent but these changes are here to stay in the medium term.

 

[Shahin_Afarin]

I have 2 OTP that I bought In end of 2013 and middle 2014.. which should settle end of this year And mid next year? What does it mean... Bank won't lend money anymore? What with the smaller bank like loans.com.au, rams, ubank, firsrmac? Are they following the big banks?

I dont want you to be crapping your pants at midnight so don't get alarmed just make sure you talk to your broker tomorrow and have a strategy for potential shortfall in servicing (or value).

 

[windyzz]

I dont want you to be crapping your pants at midnight so don't get alarmed just make sure you talk to your broker tomorrow and have a strategy for potential shortfall in servicing (or value).

I got 20% deposit for each. And I know one of OTP values has gone significantly since 2013.... Should I still be worry?

 

[Shahin_Afarin]

Im talking about borrowing capacity not deposit winds

 

[windyzz]

Thx, will check tmr