Investors and Lending
It’s time to look to our Investors. Late last year there were legislative changes which have impacted on the allowable depreciation able to be claimed on investment properties. For all our ‘about-to-invest’ clients a good article that covers the changes can be found here
The Australian Prudential Regulation Authority (APRA) last week announced plans to remove the investor loan growth benchmark and replace it with more permanent measures to strengthen lending standards.
The 10% benchmark on investor loan growth was a temporary measure, introduced in 2014 as part of a range of actions to reduce higher risk lending and improve practices. In recent years, lending overall has improved in quality, standards have been raised and increased capital resilience.
APRA has advised that it is now prepared to remove the investor growth benchmark, where the board of an ADI is able to provide assurance on the strength of their lending standards.
In summary, for the 10% benchmark to no longer apply, boards will be expected to confirm that lending has been below the investor loan growth benchmark for at least the past 6 months; lending policies meet APRA’s guidance on serviceability; and lending practices will be strengthened where necessary.
As a result, we have seen movement in the finance sector for investors. Higher LVR’s have again become available for investors (less deposit required). We have also seen decreases in interest rates for investors as well as interest only becoming an available option for investors ready to look at the market again.
RBA statistics presented by assistant governor Christopher Kent at a Housing Industry Association breakfast went to comment when being asked about the RBA next steps on interest rates. The fact that there is progress suggests to us that the next move in interest rates by us is likely to be up, not down, but the fact that gradual means there is no rush to do that.
Contact Donna-lee on 0418 903 954 or donna-lee@celsiusfinance.com.au should you wish to look at your numbers & options for investment and borrowing amounts.