“While the recent changes implemented by banks appear to be prudent, we expect further tightening in lending standards over time.” Macquarie Bank
A critical change in the mortgage lending market over past 12 months was the introduction of tougher bank lending rules for property investors.
Under pressure from regulators, the banks tightened credit standards to property investors, demanding bigger deposits and charging these customers higher interest rates on loans. These changes reduced the borrowing capacity of all borrowers and especially investors.
Even so, recent research by Macquarie Bank finds there remains a significant gap in how much an investor can borrow compared with an owner-occupier. It said even the most conservative lenders were willing to lend an investor 6.8 times their income compared with 5.3 times for an owner-occupier.
The research comes after some banks have in recent months re-opened the door to property investors by accepting lower deposits or offering deeper discounts. However, Macquarie argue that lending standards are likely to tighten further as the financial regulator steps up supervision of banks to prevent risks building up.
Read article here: SMH Article