Connect with us

Finance

Tightened Lending Conditions: Hidden Opportunities For Investors

Published

on

Tightened Lending Conditions: Hidden Opportunities For Investors

Tightened Lending Conditions: Hidden Opportunities For Investors

With the latest ABS figures for 2015 showing that the number of loans to investors had dropped by 2 per cent nationally, it was easy for market speculators to conclude that this was purely as a result of tightened lending conditions by the main banks following a ‘boom’ period in the property market.

Other commentators found further fuel for this argument in the fact that loans to owner occupiers over the same time frame late last year remained virtually unchanged nationally, however according to Aviate Group Managing Director Neil Smoli, there is much more to this figure’s consistency than most would care to uncover.

“When most banks and lending institutions issue quarterly data outlining owner-occupier to investor lending ratios, you’ll most often find that the definition of ‘owner-occupier borrowing’ also includes a few less serious debt categories, such as loans taken out by owners in occupancy to either extend or renovate existing mortgaged homes,” he said.

Mr Smoli believes that the recently tightened borrowing conditions for investors can also be viewed as a blessing in disguise, not only for first homebuyers – as many are speculating, but also for more strategic investors looking at any potential property investments with a long-term view.

 

“For a time, investors were becoming accustomed to LVR rates well below 90 per cent, but as we are seeing now,more and more lenders are bringing their LVR requirements for investors back to the 90 percent mark.”

 Tightened Lending Conditions: Hidden Opportunities For Investors

“Thus, not only is it possible that you might get your investment property for less than expected, meaning you may even be able to borrow less, but you’re also likely to benefit from interest rates that are widely to stay the same or drop even further in 2016, not to mention come up against far less competition on auction day.”

In relation to recently released CoreLogic RP Data figures that revealed the national rental market posted an increase of just 0.3 percent in 2015, a record-low since records began in December 1996, Mr Smoli said this only reinforces the need to take a long term view with any property investment.

“Again, figures such as those released by CoreLogic RP Data require a level head and certainly some market knowledge – or good advice from your experienced adviser, who would almost certainly agree that the glum numbers come with a definite silver lining for investors,” Mr Smoli said.

“Furthermore, we always urge our clients to take a strong interest in the fine print – in this case, a more in-depth look at the figures and their breakdowns, as renting Sydneysiders and Melbournians both experienced a rise in rents of 1.9 and 2.2 percent, respectively.”

Mr Smoli concludes that for astute investors who follow proven steps in selecting an investments property, the current market – or any market which appears not to favour investors, should never be a deterrence, but a potential golden opportunity.

Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Finance

RateCity predict June and then August rate cut

Published

on

RateCity predict June and then August rate cut

Home loan comparison website RateCity.com.au expects the Reserve Bank to cut rates at the June meeting, and then again as early as August.

RateCity’s research director Sally Tindall said cutting rates was no longer an “if’, but “when” scenario for the RBA.

“Governor Lowe has been extremely hesitant to cut the cash rate, but he’s working against a backdrop of rising unemployment, falling inflation and less than impressive wages growth,” she said.

“If he doesn’t cut tomorrow, he’ll catch much of the nation by surprise.

“The decision seems close to a foregone conclusion. The one thing that could hold him back is the fact that he only has a few trump cards left in his hand before he bottoms out, but he’s made it very clear he’s prepared to play.”

RateCity’s forecast for two cuts would take the official interest rate down to 1 percent.

If the cash rate is cut to 1 percent, owner occupier variable home loan interest rates are set to drop below 3 per cent, while investor rates could fall as low as 3.24 per cent.

RateCity predict June and then August rate cut 1

“If a rate cut does happen, there will be pressure on the banks to pass it on in full.

“Banks have been hiking rates since 2017 due to the high cost of funding, but this pressure has dissipated, so the next RBA cut should, in theory, be passed on in full.

“That said, it’s been a tough year for the banks in a slowing home loan market, so some lenders may choose to hold part of the cut back,” she said.

Source: brisbaneinvestor.com.au

Continue Reading

Finance

APRA Moves to Scrap 7pc Loan Buffer

Published

on

APRA Moves to Scrap 7pc Loan Buffer

In a move that is most likely to benefit owner-occupiers and the wider property market, the Australian Prudential Regulation Authority is proposing the 7 per cent serviceability buffer on home loans be removed.

With housing prices continuing to fall sharply in Sydney and Melbourne, APRA’s unwinding of its restrictions is part of a coordinated action by the prudential regulator, central bank and government.

The decision, in the wake of the weekend’s federal election, will provide banks with credit growth and reduce pressure on margins by lessening the need for rate cuts.

This may be more good news for the banks, following their big rise in the markets on Monday, but the news could also have negative implications on Australian household debt levels.

The banking regulator said it was putting its 7 per cent minimum interest rate “floor” under review, because the policy may have reached its use-by date after reviewing its “appropriateness”.

APRA first introduced the serviceability guidance in December 2014 as part of its efforts to reinforce sound residential lending standards in an attempt to temper ballooning house prices and surging housing investor loan growth.

They required the banks to assess all home loans against a floor of 7 per cent or 2 per cent above the rate paid by the borrower, whichever was higher.

Banks have typically added a further 25 basis points to the 7 per cent threshold taking it to 7.25 per cent and a buffer of 2.25 per cent.

If the changes were to go ahead, authorised deposit-taking institutions (ADIs) would “be permitted to review and set their own minimum interest rate floor for use in serviceability assessments”.

“APRA introduced this guidance as part of a suite of measures designed to reinforce sound residential lending standards at a time of heightened risk,” APRA chairman Wayne Byres said.

“Although many of those risk factors remain – high house prices, low interest rates, high household debt, and subdued income growth – two more recent developments have led us to review the appropriateness of the interest rate floor.

“With interest rates at record lows, and likely to remain at historically low levels for some time, the gap between the 7 per cent floor and actual rates paid has become quite wide in some cases – possibly unnecessarily so.

“The changes, while likely to increase the maximum borrowing capacity for a given borrower, are not intended to signify any lessening in the importance that APRA places on the maintenance of sound lending standards.

“Rather, it is simply recognition that the current interest rate environment does not warrant a uniform mandated interest rate floor of 7 per cent across all products.”

The proposed revision comes as financial markets are anticipating the Reserve Bank will lower official interest rates to 1.25 per cent in the coming months.

In an attempt to rebound lending growth, APRA has been quick to support the banking sector, removing its 10 per cent growth cap on investor lending and 30 per cent limit on interest-only lending.

Lowering the floor could also provide some welcome support for the stricken housing market, following a 10 per cent slide in national house prices.

APRA has set a four-week consultation period on the proposals, closing on 18 June, but they are expected to be confirmed.

Source: brisbaneinvestor.com.au

Continue Reading

Finance

Luxury Noosa home fetches $8m as buyers rush to cash in

Published

on

Luxury Noosa home fetches $8m as buyers rush to cash in

INTERSTATE buyers lusting after the Noosa lifestyle are forking out millions for waterfront properties, as they rush to cash out of Sydney and Melbourne’s flagging housing markets.

INTERSTATE buyers lusting after the idyllic Noosa lifestyle are forking out millions for waterfront estates, as they rush to cash out of Sydney and Melbourne’s flagging housing markets.

The ink has just dried on the purchase of an ultra luxurious, waterfront home in Noosa Heads for a cool $8 million in one of the biggest settlements in the resort town so far this year.

Luxury Noosa home fetches $8m as buyers to cash in

Selling agent Adam Watts of Century 21 Conolly Hay Group said the four-bedroom, four-bathroom Hamptons style property, with its own private jetty, at 45 Witta Circlehad just settled after selling to an expat to use as a holiday home.

Mr Watts said interstate and international inquiry for Noosa’s prestige market was strong, with many people wanting to move there for the lifestyle — not just to buy a holiday home.

A luxurious house on the waterways of Noosa Sound has also just sold for $5.75 million to a Melbourne buyer planning to retire in the sunshine state.

Luxury Noosa home fetches $8m as buyers

Selling agent Nic Hunter of Tom Offermann Real Estate said another two, older-style properties had gone under contract in the same street at the weekend for around the $4 million mark each.

And down the road in Sunrise Beach, another four bedder on the beachfront has just been signed for $4.2 million.

Luxury Noosa home fetches $8m buyers rush to cash in

Mr Hunter said the buyer of 27 Mossman Court had previously owned a holiday villa in Noosa, but decided it was time to move there for good.

“There are five bedrooms, so plenty of room for all the family to come and visit,” Mr Hunter said.

“He wants to enjoy fishing out on the jetty with the grandkids.”

Luxury Noosa home fetches $8m buyers to cash in

Mr Hunter said the increase in interstate migration to Queensland was being felt strongly in the Noosa region, with buyers snapping up properties on the water with proximity to Hastings Street and room to park a boat.

“It’s a big trend going on here at the moment,” he said.

“The higher-end, lifestyle seekers are fuelling the market — mostly from interstate.”

Luxury Noosa home fetches $8m as buyers rush to cash

The latest Herron Todd White property market outlook reveals expat buyers benefiting from the weaker Australian dollar are looking to the Sunshine Coast as Sydney and Melbourne investors feel the effects of a softening market.

The report cites proximity to the beach as a driving factor for purchasers, which was expected to continue in 2019.

HTW expects the prestige markets in Noosa to continue to see “some good activity this year on the back of some record sales in 2018, but it may be impacted by the slowdown in confidence in the Sydney and Melbourne markets.

Originally published as Cool $8m for Noosa dream home

Source: news.com.au

Continue Reading

Make Your Super Work

smsf property investment smsf borrowing

Positive Cashflow Property

duplex designs, dual occupancy homes

Property Investment Advice

investment property calculator successin property

Trending