Part of article from Fin Review...FYI

[Jester]

From: John P


I have only added "part" of article from Page 43 where lenders are getting worried about IP's. The general theme is increased tenant vacancies in apartments.

"So today, anyone borrowing from the ANZ to buy an investment apartment needs to have enough capacity to cover the loan should property be empty for 3 months"

 

[WebBoard]

Reply: 1
From: H T


fair enough in this market...

 

[Rolf Latham]

Reply: 2
From: Rolf Latham


Hi John

No self respecting Broker, Bank Manager, or Financial Officer would let a client go into a deal without some form of buffer in any case. In the case of a broker its not entirely unselfish anyway, because we prefer not to lose out trailing commissions )

Those that know me will be aware that I am a conservative soul( too much so for many) and I believe you are better off protecting what you have rather than leting your butt hang out in the breeze.

I suggest an absolute minmimum 5 k for a small investment, and on larger deals 20 k per 500 k as minimums. This does not have to be cash but can be redraw equity or shares.

Also, ANZ have recently increased their serviceability buffer from 1.5 % above the standard variable to 2.25.

The reasoning is protection for the borrower and the lender when rates rise (note that of course they did not say IF).

Will other lenders follow suit ?

Ta

Rolf

 

[Jester]

Reply: 2.1
From: John P


Hi Rolf, no disrespect intended, but my reason for posting the article was not to have a jibe at the ANZ....in fact I know very little about the ANZ's services. I'm just wondering if this is how my posting was percieved. The reason for my posting was to simply re-iterate how bad things are getting with rental properties and vacancy rates.

This initiative by the ANZ appeared to be a clear example by the banks that even their perception is that things will get worse before they get better.

Johnno

 

[Rolf Latham]

Reply: 2.1.1
From: Rolf Latham


Hi JP

Your post was certainly not received in any negative way by me, at the ANZ or anyone else. Indeed I think the timing of it was good.

Excellent timing in fact.I was once again reminded last night when I was with a client what some large development companies and allied financiers will push through to get a sale at the moment since times are tough Young couple making 30 k each with (get this) 30 k total equity in their home had secured a 106 % lend on a Sydney 2 bed near city OTP apptment for 330 K. If there is not tennant for a couple of weeks they will be in strife since there is absolutely no buffer.

Ta

Rolf