BANKING INFORMATION YOU NEED TO KNOW NOW
You will have seen significant changes to the property and lending landscapes over the last 2 years and this has continued into 2018, with a number of banks and funders moving their rates or changing their Polices.
Some of the changes include:
- Regulatory intervention by ASIC and APRA on funding institutions via capping investor lending to slow growth
- Increased investor activity in the Australian market over the last 5 years
- Cash rich foreign investors putting strains on supply and increasing competition for buyers
- Rate increases in the USA and questions around the Australian interest rate market
- The strong increase in property prices across a range of markets with a focus on metropolitan Melbourne and Sydney
- A decrease in property values in areas such as Perth
APRA and ASIC are making a profound impact on our market at present which in turn is restricting what you may be able to borrow as individuals as well as restricting the banks and capping there lending ability. Yes, restricting the banks from lending. What this means is your bank can be ‘open and closed’ depending on where they are at with their regulatory requirements. I have had many discussions with my customers of late about this and it is true, your bank may be closed today and open tomorrow!!
Surprising I know and a completely different mind shift for all of us to digest. By that I mean they aren’t open for good/reasonable discounts and in fact they aren’t too bothered if you leave your bank to ensure their numbers meet the government requirements.
Banking in the past has always been seen as a personal relationship where by its reciprocal, they need me as much as I need them.
This is now changing and when you borrow next time and wish to get a favourable discount like you may have received in mid-2016, in most cases the major banks will be 30-40 points higher with the end rate you receive on Investment Loans because of the regulations and the banks complying to keep their lending volumes lower.
Why is APRA and ASIC involved?
There is an argument for external regulatory intervention and the desire to slow the growth of the Australian property market with both Melbourne and Sydney being ranked in the top 10 most expensive cities in the world. There is also an equally strong argument that supply and demand will determine the price in a free market, and with the lack of housing supply in areas that are close to jobs, education, and healthcare and transport this could continue to mean price growth outstrips some buyer’s abilities to enter the market. Simply put ASIC and APRA feel that if the market is not slowed in the major cities then there could be larger ramifications in the future.
So does this mean that the property market is no longer a viable investment and or we can’t borrow anymore? Our professionals that The Australian Lending & Investment Centre are working closely with believe that there are still opportunities in the Australian landscape for the discerning investor that is well advised and backed with strong research. There can always be opportunities in a market, their key is picking the right location and asset class – as such we encourage our clients that are looking to purchase property, to use a Buyers Advocate to help them with the journey if they don’t wish to conduct all the research themselves and or don’t have the desired passions in the Investment property market.
The regulatory changes restricting the major banks has opened up new opportunities in the debt markets as well. A nationwide survey for non-bank lender State Custodians Home Loans, conducted by Galaxy Research, has revealed the majority of Australians (72%) believe a big bank is not their best option for service in a crisis. With over 400 institutions available to fund client’s needs, it has never been more important to avail yourself to the choices in the market. Opportunities outside the major banks are far more relevant now with lower rates, better borrowing capacities and flexibility/communications like the old day banker.
In summary ALIC and its business partners see potential opportunity ahead in the future as the markets in Sydney and Melbourne change when there is reduction in demand, more opportunities and the ability to negotiate better prices again. During these times our experts also see opportunities interstate and minor cities located nationally.
At The Australian Lending & Investment Centre we like to keep our clients abreast of what is happening and I think this email is quite timely so that you are in the know of what and why these things are happening and how to interpret the changes, so that your next action can be calculated around borrowing to invest and or simple changing your lending structure slightly.
Please contact us to discuss your lending structures/strategies plan for the next 12-24 months and or just to ensure that you are on track and in the right position after all the Government and Bank realignments.
We look forward to hearing from you and allocating an important meeting time to discuss your situation and all of the above and how it can benefit yourself. Call on 1300 254 228.
Regards and thanks.
Your Investment Lending Manager