There are numerous topics concerning property investment at the moment. The focus in this article is on the recent changes to lending criteria for investment loan refinances.
Two weeks ago, CBA, one of the big 4 changed their policy concerning the refinance of investment property loans. It has now placed a hold on these transactions. Why? If you rewind approximately 12 months to when APRA enforced an increase to the minimum capital banks are required to hold against investment property loans to 10% (known as BASEL 4), analysts claimed CBA sat comfortably within the limit. CBA’s lending criteria didn’t change at this stage however they may now have reached a point where they need to adjust their portfolio to ensure they stay within APRA’s regulatory limitations.
If this is the case, then it would be reasonable to expect that the CBA will return to the investment loan refinance sector once their loan book readjusts. This might take up to 6 months (or even longer) but don’t be concerned. A simple adjustment to your loan set up will ensure you’re still able to refinance. For example, by adding your owner-occupied property as security your facility can then be reclassified as an owner-occupied loan and won’t fall.
CBA are not alone in making changes to their investment loan criteria. Other changes in 2016 saw ING withdraw from the investment loan market for a period of time. Last week, AMP released updates to their investment lending criteria which were similar to CBA – AMP went a step further and also reduced their LVRs for purchases to 70% .
It’s worth noting that Westpac, ANZ and NAB – along with many other smaller lenders – are still open for business when it comes to refinancing investment loans.
If you’re looking to apply for a new investment loan or refinance an existing one, contact one of AUS Finance Group’s lending specialists who are aware of all the recent changes and can make your transaction a simple one.
Mathew Ciavarella – Operations Manager.
Learn more about Mathew here.
Disclaimer: This article has been prepared without taking into account your objectives, financial situation or needs and should be regarded as general advice only. Before acting on this advice you should consider whether it is appropriate for your needs and has regard for your own objectives and financial situation. We encourage you to consult a finance professional before acting on any advice provided in this article or found on this website.