LVR changed for some WA/QLD regional locations

Mick C

Mick C

Summary Email from ANZ.

---LVR changes for some regional locations---

Mortgage lending in mining regions carries unique risks due to the vulnerability of local economies to fluctuations in mining investment and mining activity

Effective 21st January 2013.

STATE POSTCODE TOWN POSTCODE TOWN
WA 6346 Ravensthorpe 6718 Roebourne
6436 Menzies 6720 Wickham
6437 Leinster 6721 Port Hedland
6438 Leonara 6722 South Hedland
6638 Mt Magnet 6728 Derby
6639 Sandstone 6751 Tom Price
6646 Wiluna 6753 Newman
6710 Onslow 6754 Paraburdoo
6714 Karratha 6758 Nullagine
6716 Pannawoncia 6760 Marble Bar
QLD 4744 Moranbah 4745 Dysart


Restrictions:
* 80% LVR max for Investment
* Rental yield capped at 10% of the FMV(for serviceability)

^ sigh at 10%....

P.s This is just an ANZ change, the other 3 ( well really 2- CBA and Westpac) are still ok with regional towns up to an 90% LVR ( 95% maybe for security under $500,000)
 
Only 10% of the rental income is extremely harsh. Even if those towns have a massive downward shift, while there's still ore in the ground I don't see them dying completely.

This could ultimately mean that it's impossible to borrow money in these areas, which in itself will mean that prices will crash.

Westpac also has their own issues with many of the postcodes on that list, although not quite as harsh as ANZ.
 
^ that is true...i mean a lot of investors turn to regional town for rental yield and to improve their serviceability -- capping it at 10% just means they will lose business from your standard asset/equity rich and serviceability poor clients.
 
PT_Bear said:
Only 10% of the rental income is extremely harsh. Even if those towns have a massive downward shift, while there's still ore in the ground I don't see them dying completely.

This could ultimately mean that it's impossible to borrow money in these areas, which in itself will mean that prices will crash.

Westpac also has their own issues with many of the postcodes on that list, although not quite as harsh as ANZ.
Click to expand...

Sounds like a good thing prices in those places are rediculous anyway maybe more ppl will be able to live there rather than fifo with more realistic prices anyway. Prices were bound to crash eventually - I mean a million bucks for a house in port headland or 3000 a week in rent, really?
 
I think the drop for karratha is ridiculous, i would way rather security of soemhting that actually rents for a decent price than some dog box in the city with a ferral tenant that cant scrape together a few hundred bucks a week.

this will exacerbate the rental problem (for tenants), not improve it i.e. removing rental supply will not drop rents, it will push them up
 
* Rental yield capped at 10% of the FMV(for serviceability)

Does that mean 10% of the actual rent.

OR

Yield of 10% of the FMV of the property even if yield is greater than 10%????

I think it means the second, so rents capped at 10%.

So not as bad as 10% of a 11% yield (effectively a 1.1% yield :eek: )
 
Ausprop said:
I think the drop for karratha is ridiculous, i would way rather security of soemhting that actually rents for a decent price than some dog box in the city with a ferral tenant that cant scrape together a few hundred bucks a week.

this will exacerbate the rental problem (for tenants), not improve it i.e. removing rental supply will not drop rents, it will push them up
Click to expand...

the banks can smell a cool down in mining.
 
tambourineman said:
the banks can smell a cool down in mining.
Click to expand...

then they need to be looking at the rest of their portfolio which will suffer a lot more should their amazing powers of forecast come to fruition (given iron ore price forecasts you have to wonder). if i were to be exposed to any industries for the next few years it would be oil and gas. my neighbour signed off on a three figure multi million dollar supply contract earlier in the week, lucky man. needless to say he was a bit tipsy that night! fortunes are being made.
 
HotRod said:
* Rental yield capped at 10% of the FMV(for serviceability)

Does that mean 10% of the actual rent.

OR

Yield of 10% of the FMV of the property even if yield is greater than 10%????

I think it means the second, so rents capped at 10%.

So not as bad as 10% of a 11% yield (effectively a 1.1% yield :eek: )
Click to expand...

most houses sell on about 10 to 12% so yes this would make sense
 
HotRod said:
* Rental yield capped at 10% of the FMV(for serviceability)

Does that mean 10% of the actual rent.

OR

Yield of 10% of the FMV of the property even if yield is greater than 10%????

I think it means the second, so rents capped at 10%.

So not as bad as 10% of a 11% yield (effectively a 1.1% yield :eek: )
Click to expand...

Yeah it must - yield of 10% of fair market value. 10% of the actual rent is insane....although it is a bank policy so nothing would surprise me.

Cheers

Jamie
 
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