18 Aug 2015 By: Greg Hocking 0 Comment
Last December the Australian Prudential Regulation Authority (APRA) introduced rules on how much lenders can lend real estate investors. The regulator demands that banks cap investor loans at 10% of their total lending as part of a push to curb investor numbers in Sydney and parts of Melbourne.
The Big 4 banks have all amended their lending criteria. They now demand bigger deposits from property investors seeking home loans. Most have also reduced interest rate discounts to investors and tightened serviceability parameters.
“Based on commitments … APRA expects to see a slowing trend (in investor lending) for the second half of 2015,” APRA said in The Australian online last month.
Understandably, vendors may wonder if these tougher lending rules will make it harder to achieve desired sale prices. Will the buying market dry up?
In my opinion, it’s a resounding ‘no’ on both fronts. Yes, it has become more difficult for some low-income investors to borrow capital needed to grow their property portfolios. But with interest rates still at record lows anyone with solid income and some equity is still actively hunting blue-chip properties and getting finance to buy.
These APRA changes are intended to give owner-occupants a chance to enter a very active, investor-fuelled housing market. I do not see gross buyer numbers falling.
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