Banks reducing borrowing capacity of property investor customers May 2015

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Banks are now reducing borrowing capacity of property investors, May 2015

Recent changes in loan assessment policies by several banks has reduced clients maximum borrowing capacity. This has been done by making their loan assessment criteria tougher when assessing customers ability to repay loans.

This is especially true for borrowing for investment properties or when using income from investment properties in calculations on the client’s ability to repay loans. Other changes include removing negative gearing allowances, limiting loan to value ratios to 80% for investment loans and removing discretionary interest rate discounts for investment loans. With different banks choosing different measures (out of those listed above) to make their borrowing power more conservative.

Why are the banks changing their policies to reduce borrowing capacity, particularly for property investors?

These recent changes are in response to the pressure that the Australian Prudential Regulation Authority (APRA)  has been asserting on banks and lenders in response to the growth in particularly investment property loans for speculative real estate purchases (i.e. Sydney).

These new changes come after APRA warned banks about the importance of vigilant credit assessments, after the outcomes of a hypothetical borrower survey were “a little disconcerting in places”. When using the assessments used by lenders when determining how much people could borrow under different hypothetical borrower scenarios, APRA found large differences in the maximum borrowing capacity between lenders. With the largest assessed maximum borrowing amount from a lender being in the order of 50% more than the most conservative lender. ARPA stated that one significant factor behind differences in borrowing capacity, particularly for owner occupiers, was how lenders measured the borrower’s living expenses.  Another area of interest were the differences in the treatment of interest only loans in the hypothetical test, which included one borrower seeking a 30-year loan, with the first 5 years on an interest-only basis.

These blanket measures for property investors appear to be rather un-targeted given that the concern of an overvalued property market is restricted to Sydney and the new tighter measures apply regardless where the property is being purchased.

Limiting lending in certain postcodes is a target approach that has been used by lenders to limit bank exposure. It is unclear why lenders have not taken a more targeted approach of limiting lending or applying tighter lending measures by postcode now.

Are you still interested in borrowing to invest in Australia’s property market?

Some lenders still provide reasonable borrowing capacity for property investors. Find out more about investment property loans here:

Investment property loans

 

Or contact a mortgage brokers near you to go through your finance options:

Mortgage brokers in Adelaide

 

Mortgage brokers in Brisbane

 

Mortgage brokers in Canberra

 

Mortgage brokers in Melbourne

 

Mortgage brokers in Perth

 

Mortgage brokers in Sydney

 

Mortgage brokers in other areas

 

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Two of Australia’s big four bank stop offering self Managed Super Fund property loans

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NAB joins ANZ in ceasing offering Self Managed Super Fund property loans

Among concerns of an overheated Sydney property market National Australia Bank (NAB) has confirmed it will cease offering Self Managed Super Fund property loans.

NAB is now the second major bank cease offering SMSF property loans following ANZ  that announced that it supports for the Financial System Inquiry’s recommendation to remove the exception to the general prohibition on direct borrowing for limited recourse borrowing arrangements (LRBAs) made by superannuation funds. This latest move by the National Australia Bank comes after the recent cut to the Cash Rate by the Reserve Bank of Australia.

The recent cash rate has cause concern amongst some as they fear that it will lead to a further stimulation and ultimate burst of the “Sydney property bubble”. The recent NAB decision to cease offering SMSF property loans has only lead to further speculation about Sydney’s property bubble.

Are you looking to purchase property in your SMSF?

If you are wanting to invest in property through your Self Managed Super Funds (SMSFs) do not despair some lenders still offer SMSF loans for property.

You may be able to use a SMSF property loan to purchase a single residential investment property if you are an Australian resident with an existing SMSF or are in the process of establishing an SMSF you may be able to also purchase a commercial property in your SMSF.

Contact us about a Self Managed Super Fund property loan.

SMSF property loans

Do you want to invest in Australian property?

Find out more information about investment property loans.

Investment property loans

Or if you want to discuss your home loan, investment property loan, or business loan options with a mortgage broker contact us:

Mortgage brokers in Adelaide

 

Mortgage brokers in Brisbane

 

Mortgage brokers in Canberra

 

Mortgage brokers in Melbourne

 

Mortgage brokers in Perth

 

Mortgage brokers in Sydney

 

Mortgage brokers in other areas

 

Oak Laurel Mortgage Brokers – Home loans made easy!

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Today 5 May 2015 the Reserve Bank of Australia cut the interest rate to 2%

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Today 5 May 2015 the Reserve Bank of Australia cut the interest rates to 2%

The Reserve Bank of Australia (RBA) met today to consider monetary policy and decided to cut interest rates by 0.25% to 2.00% effective from 6 May 2015.

In making the decision to cut interest rates, the Reserve Bank of Australia Board consider a range of economic factors including inflation, employment, commodity prices and Australia’s terms of trade, weakness in business capital expenditure in both the mining and non-mining sectors, subdued public (Government) spending, the exchange rate, the price of equities, growth in lending to the housing market, dwelling prices including Sydney price rises and prices in other cities.

The statement by the RBA board decided that the interest rate be cut but 0.25% to 2% and conculded that:

At today’s meeting, the Board judged that the inflation outlook provided the opportunity for monetary policy to be eased further, so as to reinforce recent encouraging trends in household demand.Glenn Stevens, Governor, Reserve Bank of Australia

As intended the rate cut will stimulate demand for credit including home loans, investment property loans and business finance.

This latest interest rate cut combined with the previous interest rate cut in Feb 2015, though widely expected, is likely to further stimulate interest in the property market from first home buyers and property investors alike and further push up property prices in selected markets.

Are you interested in purchasing an investment property?

Find out more information about investment property loans.

Investment property loans

 

Or if you want to discuss your home loan or investment property loan options with a mortgage broker contact us:

Mortgage brokers in Adelaide

 

Mortgage brokers in Brisbane

 

Mortgage brokers in Canberra

 

Mortgage brokers in Melbourne

 

Mortgage brokers in Perth

 

Mortgage brokers in Sydney

 

Mortgage brokers in other areas

 

Oak Laurel Mortgage Brokers – Home loans made easy!

Oak Laurel Mortgage Broker

 

 

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Chinese now Australia’s biggest foreign property investors

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Chinese now the largest foreign buyers of Australian real estate

Chinese are now Australia’s largest foreign property buyers, pushing the USA out of 1st place according to the Foreign Investment Review Board (FIRB).

Foreign Chinese property investors spent $12.4 billion on Australian property in 2013-14 up from 2012-13 when foreign Chinese spent $5.9 billion on Australian real estate according to the FIRB.

China’s total approved investment in Australia last financial year was $27.7 billion, while the US were approved to invest $17.5 billion. Canada is Australia’s third largest foreign investor with $15.4 billion of investment whilst Malaysia was the forth largest with $7.2 billion of investment.

The foreign property buyers focused on new dwellings, spending $16.4 billion on off the plan apartments up from $5.7 billion.

The foreign spend on existing homes jumped almost $2 billion to $7.17 billion last financial year.

Investment in commercial real estate also increased from $34.8 billion to $39.9 billion.

Investments in real estate accounted for almost half China’s total Australian investment, with its $12.4 billion approved investment more than twice the amount of the Americans on real estate.

The FIRB figures tally approved investment rather than actual investment.

Melbourne in Victoria, Australia is a hotspot for foreign property buyers

Melbourne has become a hotspot for foreign investment. Foreign investment in Australian residential property doubled in the last financial year and with most investment occurring in Victoria.

Victoria saw more than 10,000 approvals granted to foreign investors, according to the Foreign Investment Review Board annual report.

Interest from overseas buyers is creating price growth in some segments of Australia’s real estate market.

Glen Waverley, Mt Waverley and other suburbs in the Monash City Council area, such as Notting Hill in Melbourne are hot spots for Chinese buyers, ranking as the most popular suburbs in Australia on a Chinese property portal. The Monash area is also a very popular area with local Chinese which make up the majority of the market.

More generally, Melbourne is rated as one of the world’s top cities for Chinese buyers, according to a luxury real estate website and was the only Australian city to make the top 20 global destinations searched by Chinese buyers on propgoluxury.com

Are you looking to invest in property? Find out about investment property loans here:

Investment property loans

Or you can contact one of our mortgage brokers to assist you with your finance.

Mortgage brokers in Adelaide

 

Mortgage brokers in Brisbane

 

Mortgage brokers in Canberra

 

Mortgage brokers in Melbourne

 

Mortgage brokers in Perth

 

Mortgage brokers in Sydney

 

 

Are you a Chinese property investor, looking for a home loan and want to speak to a Chinese home loan broker?

If you are Chinese and need assistance, we have Chinese home loan brokers that can help you. Our Chinese home loan brokers can assess and compare home loan options for you so that that you don’t pay too much.

If you are a Chinese property investor, we can help you to find home loans that suit property investment and structure your investment home loans correctly to save you money and increase your flexibility. Ask us about home loans for Chinese property investors.

Contact us here:

Chinese mortgage brokers

 

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