APRA swinging for the fences...

Hi all

So the recent bank equity raisings caught me off guard but now it's all starting to make sense (I haven't been watching closely)...

http://www.abc.net.au/news/2015-05-18/investor-home-loans-tighten-as-regulator-clamps-down/6477134

That's a laundry list of strategies we all use to increase access to credit - for banks to take away from us. Interest rate deductions for investors, interest only, reduced buffers on external or internal debt - you name it and APRA appears to be going for it.

So it looks like APRA is getting serious about getting investor lending down around 30% again. From a public policy perspective, it's all probably a good idea - it's going to take the heat out of house prices in many over heated areas that has been caused by investors and increase the resilience of the financial system to future shocks.

Doesn't bode well for capital growth though - clamping down on the only source of lending that has been growing in recent years. If this actually get deployed as mooted here it's my bet that the Australian real estate market will have to get used to the sound of crickets chirping for an extended period...
 
Fair enough. I guess I had just classified the stuff I had seen to date as a combination of sabre rattling by APRA and a few banks admitting it was about time to close that loophole in their servicing calculator. But it's looking to be a much bigger issue than that?
 
The only question I have is how long does it take before the wider housing market gets affected by this?

I understand other markets will definitely get hit harder than others and I strongly believe this tightening may finally see the burst of the Melbourne inner city housing market (I felt sick to my stomach when I walked from south bank into work this morning and saw another building demolished with yet another skyscraper going up, not to mention the open car park I use is about to make way for 3 more)!!
 
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If the banks collapse because of exuberant lending, the entire country's taxpyers will bail them out to avoid a Bear Stearns economic collapse.

It's just right to keep risks in check.
 
It is already happening just today ANZ "For customers with Investor only lending: ANZ will only offer advertised rates, discretionary pricing will be not be available " and Bankwest ( CBA ) "The maximum Loan to Value ratio (LVR) will be 80% for any loan for investment purposes, including the purchase of shares.
"

Last week CBA " reduced pricing discounts for Investment Home Loans in the Home Loan Pricing Tool "
 
It is already happening just today ANZ "For customers with Investor only lending: ANZ will only offer advertised rates, discretionary pricing will be not be available " and Bankwest ( CBA ) "The maximum Loan to Value ratio (LVR) will be 80% for any loan for investment purposes, including the purchase of shares.
"

Last week CBA " reduced pricing discounts for Investment Home Loans in the Home Loan Pricing Tool "

Given that ANZ were already one of the tightest out there, I hate to think what the others will end up doing with APRA breathing their necks...

This is going to scare off a lot of investors!
 
I'm reading that APRA have told lenders that they aren't satisfied with serviceability assessments for property borrowers. Owner occupied and IP. APRA want P&I not IO to be used for all serviceability calcs - even on IO loans. And existing loans too - Not just the new application.
 
I'm reading that APRA have told lenders that they aren't satisfied with serviceability assessments for property borrowers. Owner occupied and IP. APRA want P&I not IO to be used for all serviceability calcs - even on IO loans. And existing loans too - Not just the new application.

Does any one have an idea on what borrowings that would come down to in relation to earnings ?

Cliff
 
Interesting. How will this affect all markets? Do we think it's silly that banks are tightening lending because of 1 or 2 cities?
 
It is already happening just today ANZ "For customers with Investor only lending: ANZ will only offer advertised rates, discretionary pricing will be not be available " and Bankwest ( CBA ) "The maximum Loan to Value ratio (LVR) will be 80% for any loan for investment purposes, including the purchase of shares.
"

Last week CBA " reduced pricing discounts for Investment Home Loans in the Home Loan Pricing Tool "

Sounds like we got in just in time with our 1.04 discount with ANZ... :cool:
 
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