The Reserve Bank of Australia is concerned that banks are loosening their lending standards for property investors.
The RBA says it’s prepared to act to tighten investor lending standards unless the banks do so themselves.
The RBA first became concerned about investor lending in the housing market in 2014. This was due to proportion of loans to investors approached 50 per cent of all new loans.
APRA is the banking regulator and, at the same time, APRA set guidelines to make sure property investor lending did not exceed 10 per cent growth each month. This action was successful in reducing property investor loans to 44 per cent over the months following.
However, the most recent lending figures show the proportion of property investor loans has climbed above 50 per cent again. Lending to property investors grew 27 per cent in the year to January, well above APRA’s 10 per cent benchmark.
This means the RBA and APRA will closely monitor investment property loans over the coming months and will act again if needed.
Recently the Commonwealth Bank puts the brakes on investor lending. The CBA has reduced their maximum loan-to-value ratio for property investor loans from 95% to 90%.
Also, CBA have frozen new lending to property investors looking to switch banks. This means property investors can’t refinance their current investment loan with CBA for a lower rate. These moves by CBA are designed to slow their strong growth in lending to property investors.
At Craig Tracey Lending we prepare a detailed and personalised Borrowing Plan for you. If you are looking to invest in property, we make sure you will be OK should there be any changes to borrowing for investment properties.
Read more here: Your Borrowing Plan