Invest
Lending restrictions affecting investor property plans
Restrictions applied to investment lending are having a notable effect on investors’ plans, a survey has found.
Lending restrictions affecting investor property plans
Restrictions applied to investment lending are having a notable effect on investors’ plans, a survey has found.
The annual Investor Survey by mortgage broking firm Mortgage Choice revealed 42.6 per cent of investors said that new lending restrictions impacted on their property investment plans, an increase from 33 per cent the previous year.
“This finding does not come as a surprise when you look at the current environment we are in,” said Mortgage Choice CEO John Flavell.
“Over the past couple of months, we have seen a number of Australia’s lenders introduce a raft of changes in relation to investment lending. Some lenders have changed their policy, making it harder for would-be investors to qualify for a loan, while others have modified their pricing by lifting their interest-only home loan rates.
“These changes can be largely attributed to the Australian Prudential Regulation Authority’s (APRA) decision to crack down on investment lending.”
The changes, Mr Flavell said, were made in March of this year to restrict interest-only loans to 30 per cent of new residential mortgage loans.
“As our data shows, this spate of investment lending changes are starting to affect property investors,” he said.
Some investors are forced to look beyond their traditional lender in order to obtain finance, while others are choosing to reassess their intentions to buy a property and/or put their plans on hold indefinitely.”
The survey also revealed 51.5 per cent of respondents believe these restrictions will slow down investor activity over the next one to two years.
“In light of the current market and all the changes taking place, I am not surprised to hear that the majority of Australians believe investor activity will drop over the coming 12 months,” Mr Flavell said.
“Australia’s property market has become increasingly complex in recent months. In my 25 years in the finance industry, I have never known the mortgage market to be this complex and confusing. But while there are a lot of changes afoot, there are still plenty of opportunities for investors.
“There are still a number of lenders in the market who are happy to write investment loans and are hungry for this type of business.”
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