Last week, the Australian Prudential and Regulation Authority (APRA) issued a stern warning to the banks about the accelerating growth in property investment lending.
Speaking at the A50 Economic Forum in Sydney, APRA chairman Wayne Byres said the banking regulator would intervene if their lending growth limits are breached.
“At least for the time being, the benchmarks that we communicated — including the 10 per cent benchmark for annual growth in investor lending — remain in place and lenders that choose to operate beyond these benchmarks are under no illusions that supervisory intervention, probably in the form of higher capital requirements, is a possible consequence,” Byres said.
Over the past week, some banks have appeared to have heeded this warning with changes to their investment loans.
Here’s what we know…
On Monday Bankwest confirmed they would not take negative gearing tax benefits into account when assessing new borrowers’ eligibility for investment home loans.
In a statement, Bankwest said:
“For customers who operate their investment property at a loss, where the income of the investment property does not exceed the costs, the related tax benefit will no longer be included in Bankwest’s calculation for serviceability of the loan.
“This impacts all new applications involving an investment lending facility and any existing deals which may require a new serviceability calculation after 10 February.”
This change to its serviceability calculators will lower the amount property investors can borrow from Bankwest.
Earlier this month, Bankwest had closed the door on applications from new customers seeking to refinance their investment loans with them. They also raised rates on some existing property investment loans by 20 basis points.
In the aftermath of Bankwest’s decision this week, ANZ wrote to mortgage brokers offering a $1,200 rebate for new residential investment loans, according to Fairfax.
It appears this was an attempt to win over customers from Bankwest that lost out as a result of the changes to its serviceability calculators.
After announcing a record first half profit of $4.91 billion, the Commonwealth Bank (CBA) announced it would raise interest rates on interest only housing investment loans.
— 9Finance (@9Finance) February 15, 2017
CBA said from 3 April, interest only home loan rates for investors would rise by 12 basis points (0.12%) while Viridian Line of Credit (VLOC) products would increase by 4 basis points (0.04%).
This will raise CBA’s standard variable interest only investor home loan rate to 5.68% p.a. (for the comparison rate for this home loan product, check the CommBank website after 3 April 2017).
Earlier this month, the bank also announced it would not accept new investor refinance applications through intermediaries until further notice.
— 9Finance (@9Finance) February 9, 2017
AMP has also announced it will not accept new investor refinance applications.
In addition, the lender will raise variable interest rates on principal and interest property loans by 25 basis points (0.25%) for new customers.
For new interest-only property loans, AMP has raised rates by 30 basis points (0.3%).
New applications for property investor loans with AMP will now require a loan-to-value ratio (LVR) of less than 70 per cent, instead of 90 per cent.
Investment Home Loan Market Snapshot
|Investment Home Loan Market – Snapshot of the current market (06/02/2017 -13/02/2017)|
|Standard Variable||1 Year Fixed||2 Year Fixed||3 Year Fixed|
Source: www.canstar.com.au, the search results do not include all home loan providers, and may not include all features relevant to you. Loans based on loan amount of $300,000 and available for principal and interest repayments.