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Don’t Go Straight to the Bank! Give yourself Choice!

Searching for a home loan may not be hard, but understanding all the finer details can be.

Making Sense of Investment Lending Changes

You have probably seen or read in the news recently that the Australian Prudential Regulation authority (APRA) has issued guidelines resulting in changes to mortgage lending policy.

You may be wondering exactly what the changes mean – and particularly what they mean for you.

Background

Briefly, the Government Regulators including the Reserve Bank have expressed concerns about a potentially overheated property market, especially in Sydney and Melbourne. APRA is looking to take the heat out of the market by slowing the growth of mortgage investment lending.

In its role as regulator of banks and financial institutions, APRA has issued guidelines designed to do that, as well as ensuring the ongoing strength of Australian banks.

Key changes

APRA has asked banks to cap investment loan growth at 10% p.a. A number of lenders are already at, or even over, this limit, so they are under pressure to significantly reduce their investment lending.

The four major banks and Macquarie Bank are also required to increase the capital they hold against mortgages, which tends to increase the cost of lending. Banks have already passed on some of these costs to customers via higher interest rates.

What does this mean for you?

If you have a home loan that includes principal repayments or you live in your home, you may not be affected. In fact some lenders may decrease interest rates on that loan.

If you have an investment, or an “interest only” home loan, you may find that your lender increases the interest rate on that loan.

If you are looking at buying an investment property, you are likely to find the lending market more restricted than in the past. This doesn’t mean you won’t be able to find a loan that suits you, just that it may take a little more time. That’s where I can help.

Talk to Us

Of course, everyone’s situation is different, and the information above is simply an overview. We are always happy to discuss your situation, particularly if you have any queries or concerns.

About Us

At Premier Lending, we are experienced mortgage broking specialists, who are here to help you find the right loan for your situation. We are dedicated to creating personalised mortgage solutions that anticipate and meet the needs of our customers. We are a free, no-obligation service that will empower you to take control of your financial situation.

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