Are you a property investor and worried about the new laws that APRA (Australian Prudential Regulation Authority) and the government are forcing onto the banks? Are you wondering how this will affect you directly? Can you still expand your property portfolio and if you are not yet an investor will you still be able to buy an investment property?
You may have already received a letter from the bank if you have an investment loan or an interest only loan telling you that your current interest rate has gone up. Why is it so? Well APRIA is making the banks and lending institutions carry more cash on hand against the mortgage that it has on a property. So what the government is doing is making our banks more secure, this means that the banks needed to do a capital float to raise more money. What do investors want if they are going to buy shares in a bank? A good return! Where does this return come from? It comes from the banks pushing up the interest rates on investment and interest only loans to pay for the cash reserves they hold now. This now slows up the consumer confidence in investing and reduces the 10% growth on investment borrowing per annum the government is trying to achieve.
The banks are also changing how a person can service a loan and making the conditions to approve the finance harder, with base rate servicing and other measures taken into account. However it is not all bad, we are making a stronger banking system, the investment loans will be slowing down so for the active investor who has good credit and repayment history with an income to service the debt, you are still going to get a loan and your investing is not going to stop.
Yes the banks want more deposits, greater emphases on savings and good employment or business financials, but they are also inquiring more about the type of client you are. They are interested in your character, do you have a good payment history and are you a desirable client?
Remember the investor that uses their head can see opportunity in every market you just need to know where to look. If you have a good property strategist or broker they can help you with this.
If you want to know more – talk to Blue Wave Property Strategies and get a property plan so we can have you riding the Wave to Wealth!
Here’s another great article on investor lending www.domain.com.au