8 September 2015

Portfolio Capital - Mortgage Market Wrap

Portfolio Capital - Mortgage Market Wrap Portfolio Capital - Mortgage Market Wrap

By David Harris, September 3, 2015

The last couple of months have been a period of massive change in the home loan arena - particularly so in regards to lending for residential investment properties. We've seen lenders pull out of SMSF lending, withdraw from residential investment lending, reduce lending ratios and increase interest rates for both new and existing investment loans. Some lenders are even imposing location based policies.

With all these changes occurring on an almost daily basis it has never been more important to have an expert in 'your corner' to ensure that you currently have the most appropriate and cost effective home and investment loans or, if considering new borrowings, that you are being presented with the right options.

The changes we are experiencing are largely in response to the Australian Prudential Regulation Authority's (APRA) push to kerb the unprecedented growth in residential investment borrowing. This is seen as a significant factor in soaring house prices - particularly in Sydney and Melbourne. Basically, the philosophy is, restrict the cash and demand reduces along with prices.

Of course, with interest rates at an all-time low (and with the possibility of another drop before the end of the year) one must ask if increasing rates by 27 basis points will be enough of a disincentive to prospective investors. It certainly provides a great boost to the banks' bottom lines.

Question: if it's really all about future disincentives for investment how does increasing the rates for existing customers play into that? Could this just be a revenue grab by our major lending institutions?

Reducing lending ratios (loan amount vs. property value) to 80% may be an inhibiting factor for some, however; I believe the investor borrowing market is still predominantly driven by those either with the 20% cash to inject or with sufficient equity in other properties to maintain overall lending ratios at or below 80%.

Of course, whenever a market changes, either for better or worse, a range of new opportunities always present themselves. Here are just a few:

  1. If you are looking at buying an investment property you may find that there is a little less competition out there.
  2. Changes like those we are experiencing at the moment create an ideal time to review your loan portfolio. Not all lenders have been as 'aggressive' in applying rate increases across the investor spectrum. Is yours one of the 'less generous' lenders in this respect? A review may save you thousands.
  3. If your investment loan rate has increased talk to us about lenders who will still provide an owner occupied rate if they have your investment AND owner occupied home loans.
  4. As lenders growth ambitions are curtailed (through a demand by APRA to limit investment loan growth to under 10%) they are turning their attention to the owner occupied home loan market. There are currently some incredible offers out there designed to attract new customers. Offers like 3.99% variable with full offset facilities, comparison rate 4.19%.

Why not give us a call (07 31391372) or visit us a www.portfoliocapital.com.au for a free consultation to see if we can save you some money on your home and investment loans.

Also, check out our free e-booklets below.

First Home Buyers Guide

Buying and Selling Guide

Refinancing and Investor Guides will be released next month.

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