Shift in asset classes with tightened lending

[r3ckless]

Guys,

A thought just came to me as I was on somersoft. Noticed quite a few lenders now beginning to have stricter conditions on lending, as well as lenders restricting the aggresive standpoint of approving concessions lately...

My goal from 2015 onwards was to build a share portfolio through margin lending.

Thoughts on the sharemarket having a crazy run now that obtaining lending to buy said investment property is to be restricted?

Buy in now before everyone jumps into equities? Poll for quick reference too.

 

[BayView]

Won't the restrictions on lending also apply to margin loans as well?

 

[r3ckless]

so far no.

Just resi lending....

 

[Phiber]

I reckon the market would be more influenced by say the US market or other factors than the local changes in regulation around residential investing.
I see investors going for cheaper properties/units instead.

 

[r3ckless]

I thought that too. But that would only curb us investors short term. Let's say for example prior to all these changes you could borrow another $2m. Now that lending restrictions are coming into play.. That $2m might only be $1m... Eventually u will use it up... Then what?

 

[Phiber]

Then save some more, pull equity out of your IPs?
I see your point but shares and real estate are seen very differently by the broad population, I am not convinced average investors will be wanting to leverage into shares, whereas leveraging into residential properties is perceived as a pretty safe choice.

 

[BayView]

I thought that too. But that would only curb us investors short term. Let's say for example prior to all these changes you could borrow another $2m. Now that lending restrictions are coming into play.. That $2m might only be $1m... Eventually u will use it up... Then what?

I guess you just have to wait until you've saved more cash if possible, and or pay down some debt (hopefully into an offset account so the funds are accessible again later) to increase equity for reuse.

The lenders aren't stopping the lending completely; it'll just mean less folks will qualify.

I remember this happened straight after the GFC...level 5 borrowers became level 4's, 4's became 3's...and so on.