Tuesday, 29 September 2015
||Getting an investment home loan has just become more expensive or harder to obtain as a result of some recent findings released by APRA (Australian Prudential Regulation Authority) last month.
APRA warned lenders last December that investor loans shouldn’t increase by more than 10% a year, however figures released by APRA last month showed that the debt for investor housing rose by 12.4% to just over $450 billion in the year to March.
As a result lenders are now seeking ways to slow their investor housing loan growth to bring it below APRA’s limit.
This has resulted in a tightening of credit policies for investment home loans, including the lowering of LVR’s (loan to value ratios) in some areas as well as a lifting of interest rates on investment home loan products.
Lenders are also reviewing interest rates for existing investment loans sitting in their loan book which has resulted in customers rushing to reclassify their loans to an owner-occupied loan to avoid the pricing changes.
How Do You Reclassify Your Loan?
Each lender is treating this process differently with many lenders having a set number of questions to ask the customers when they call. Some lenders are even considering asking for evidence through notice of assessments to ensure customers are not receiving any tax benefits from the property.
Many lenders are aware that this reclassification will boost the percentage of owner occupied loans on their book however they have indicated that they will be monitoring this over the coming months.
Investors Can Still Get a Home Loan
Not all lenders have lifted their interest rates or tightened their credit policies, many lenders are still offering competitive investment home loans with high LVR options whilst their portfolios are still under review. So if you’re looking to invest, have a chat to your lender on how they are treating investment loans and how these changes might affect you.