Invest
Major bank flags ‘worrying’ investor borrowing trends
One major bank has justified its exit from lending to SMSFs for residential property by referring to “worrying” and “dramatic” growth in the area, while the head of CoreData has blamed troublesome SMSF borrowing activity on non-traditional lenders.
Major bank flags ‘worrying’ investor borrowing trends
One major bank has justified its exit from lending to SMSFs for residential property by referring to “worrying” and “dramatic” growth in the area, while the head of CoreData has blamed troublesome SMSF borrowing activity on non-traditional lenders.
Speaking at the release of the fifth Intimate with Self-Managed Superannuation report, a CoreData report prepared for nabtrade and the SMSF Association, CoreData founder Andrew Inwood said while the large banks generally put restrictions on loan to value ratios (LVRs) and other lending criteria, this tends not to be the case with non-traditional funders.
“NAB no longer does residential loans [for SMSFs] and CBA processes SMSF loans through its business bank so it’s got to go through its banking business criteria,” said Mr Inwood.
“Most banks insist on [an LVR of no greater than 60 per cent], so you can’t turn up with 10 per cent, you’ve got to have greater than 40 per cent [of the value of the asset]. It’s the non-traditional funders that are doing those sorts of loans.”
MLC head of technical services Gemma Dale said NAB made the decision to cease residential lending for properties within SMSFs earlier in the year, following “dramatic growth in that area”.
“We didn’t have any specific areas of risk or any pockets of activity that we were particularly nervous about but we simply thought in a very large organisation there had been dramatic growth in this area – very, very dramatic growth and very large amounts of interest as well,” said Ms Dale.
Ms Dale said it was also difficult when customers did not understand why they did not meet the requirements for an SMSF loan.
“It was quite challenging to say you need to follow all of these rules and all of these steps and if you don’t, we simply cannot do it for you. They were a little shocked at that,” she said.
“We’re comfortable with the decision. I don’t think anyone is happy seeing dramatic growth in lending in SMSFs; I think we find that a little worrying.”
SMSF Association chief executive Andrea Slattery also discussed some of the findings of the report, including the fact that ‘coach-seeker’ and ‘outsourcer’ trustees represent the biggest growth opportunities for financial advisers.
The report also found that the common barriers to SMSF set-up were lack of knowledge of SMSFs among non-trustees, at 38 per cent; balance size not justifying an SMSF, at 32.3 per cent; and too much hassle, at 30.6 per cent.
“Notwithstanding these barriers, however, close to one in five (18.6 per cent) of non-trustees with a lack of knowledge or other constraints around setting up an SMSF would consider establishing one if an accountant or financial planner could assist them in better understanding SMSFs,” Ms Slattery said.
Property
How to turn your ‘costly’ lifestyle investment into a money-making asset
Emotionally driven holiday home buyers are being advised to seek maximum rental income and depreciation benefits to make their investments viable. ...Read more
Property
Dutch e-commerce giant VidaXL ramping up Australian operations
Netherlands-based online retailer VidaXL is ramping up its operations in Australia, by launching the build of a brand new 81,000 sq m national distribution centre in Melbourne. ...Read more
Property
Invest in property or watch savings dwindle, expert warns
Money is cheaper than it’s ever been on the back of a favourable interest rate environment, compelling Aussies to shift away from other types of investment vehicles and into property investment. ...Read more
Property
Is 2021 a great year to buy property? Aussies think so
2021 is tipped to be one of the busiest years for property ever as money remains cheap and readily accessible, with a majority of Aussies agreeing that now is a good time to buy. ...Read more
Property
Young Aussies set their sights on home ownership in 2021
The COVID-19 pandemic has accelerated younger Australians’ desire to own their own home, despite affordability remaining a significant concern, new research has revealed. ...Read more
Property
HomeBuilder stimulus causing surge in new houses: ABS
Housing schemes such as HomeBuilder and historically low-interest rates are causing a surge in new properties being built in Australia, official stats have shown. ...Read more
Property
Cancelled gap years could trigger first home buyer frenzy
COVID-19’s cancellation of travel plans could fuel demand from first home buyers in Western Australia, according to a chief executive. ...Read more
Property
When will Australia crack the $1m median house price?
A property investor has predicted Australia’s median house price will surge to over $1 million in the next three years, as the economic recovery acts as a tailwind for the industry. ...Read more
Property
How to turn your ‘costly’ lifestyle investment into a money-making asset
Emotionally driven holiday home buyers are being advised to seek maximum rental income and depreciation benefits to make their investments viable. ...Read more
Property
Dutch e-commerce giant VidaXL ramping up Australian operations
Netherlands-based online retailer VidaXL is ramping up its operations in Australia, by launching the build of a brand new 81,000 sq m national distribution centre in Melbourne. ...Read more
Property
Invest in property or watch savings dwindle, expert warns
Money is cheaper than it’s ever been on the back of a favourable interest rate environment, compelling Aussies to shift away from other types of investment vehicles and into property investment. ...Read more
Property
Is 2021 a great year to buy property? Aussies think so
2021 is tipped to be one of the busiest years for property ever as money remains cheap and readily accessible, with a majority of Aussies agreeing that now is a good time to buy. ...Read more
Property
Young Aussies set their sights on home ownership in 2021
The COVID-19 pandemic has accelerated younger Australians’ desire to own their own home, despite affordability remaining a significant concern, new research has revealed. ...Read more
Property
HomeBuilder stimulus causing surge in new houses: ABS
Housing schemes such as HomeBuilder and historically low-interest rates are causing a surge in new properties being built in Australia, official stats have shown. ...Read more
Property
Cancelled gap years could trigger first home buyer frenzy
COVID-19’s cancellation of travel plans could fuel demand from first home buyers in Western Australia, according to a chief executive. ...Read more
Property
When will Australia crack the $1m median house price?
A property investor has predicted Australia’s median house price will surge to over $1 million in the next three years, as the economic recovery acts as a tailwind for the industry. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
