Banks crackdown on investor loans
Article by Mozo
Investors are facing a tough challenge as banks are changing their rules in response to the pressure to restrict investor lending, by cutting back discounts and demanding bigger deposits for new loans. Many banks have restricted the loan to value ratios to 80% or lower.
“Rentvestors, or buyers borrowing to buy and then rent out an investment property are likely to be worst hit,” said Mozo Property Expert, Steve Jovcevski.
Investors who would have previously been able to borrow up to 90% of the property’s value with some lenders, are being asked to have a 20% deposit at the ready instead.
ANZ, Westpac and Commonwealth Bank have made changes to their lending criteria. ANZ has confirmed it will no longer offer discretionary pricing to investor only loans or offer a switching discretion to investors and Westpac has removed its negative gearing benefit, while CBA has put a halt to “pricing discounts for investment home loans.”
“The banks are clearly responding to ASIC’s concerns over investor lending and implementing the changes quickly,” said Jovcevski.
ASIC has been attempting to get a better handle on loans to investors after new investor finance has skyrocketed by 54% in just two years - double that of owner occupier finance (27%) between March 2013 – March 2015.
These changes are accompanied with the RBA suggesting that it is open to a further rate cut in the coming months.