The market for investment loans in Perth and across Australia has taken a sudden and drastic shift, thanks to the Australian Prudential Regulation Authority (APRA). This means it is now more important than ever to use a loan broker who is extremely knowledgeable about the business.
The investment property markets in both Melbourne and Sydney have exploded over the past twelve months. This has created what the APRA sees as an “imbalance” of investment property loans to owner-occupier home loans.
In late 2014, the APRA ordered lenders to maintain a yearly investment loan growth of 10% or lower. This has already resulted in many lenders having exceeded their “cap” on investment loans and temporarily not granting them.
However, many of the major lenders ignored the limits, with investment loans coming in at 10.7% for the previous twelve-month period. Consequently, the APRA has now ordered the four major banks to hold as much as $30 billion in reserve to offset what they see as “excessive risk.”
In the same period that investment loans grew 10.7%, owner-occupier home loans only grew 5.5%.
Of the big four, only Westpac was compliant, with 9.9% growth. NAB is the worst offender of the majors, with 14% growth. For perspective, smaller lender Macquarie Bank saw their investment loans grow by 81.6% in the twelve-month period ending June.
What it Means to You
As more and more banks exceed their limits, some are not currently writing investment loans, waiting for owner-occupier loans to “catch up” and put them back into compliance. At Purely Finance, we make it our mission to know who is providing investment loans and who isn’t. As we see it, you simply can’t afford not to have a great loan broker right now.
If you are thinking about a property investment loan, call our Perth office and call ASAP. As investors flock towards the lenders who are still writing investment loans, more and more are becoming “filled up.” To learn more, call Purely Finance today: (08) 9453 8888.