Just last week the Commonwealth bank proudly announced record profits. Very close behind that they announced that they would be increasing the interest rate for investment loans and would also no longer support investment loan refinances. Soon after, Bankwest, a subsidiary of CBA announced the same policy.
It seems the limit on investment lending imposed by APRA is starting to bite our biggest Bank.
The good news to come out of this unusually timed CBA media release was a quick response by the other major Banks that they would still accept and support Investor loans, new purchases and refinances, from brokers. So far, there has not been any change to refinance policies from any of the smaller non-bank lenders either. It seems most Lenders out there are very happy to refinance loans within their existing credit criteria.
So it’s back to normal for everyone except CBA.
Which makes me wonder about why our Regulatory Body is applying policies designed to restrict Investment Lending that don’t affect each bank ,or even property markets for that matter, on an equal basis. Clearly, it isn’t a lack of funds that is hurting CBA as they are still vigorously chasing Owner Occupied loans.
When did we get to the stage where the market was not capable of sorting out its peaks and troughs? Artificially manipulating the market by forcing lenders to limit lending seems counterproductive to markets that are not over stimulated.
APRA’s reasoning was to limit investor activity in certain areas of the country, namely Sydney and Melbourne. The logic behind forcing all the other markets into the same restricted lending boat has never been made clear. You see if I have learned one thing it’s that Banks know how to make money but, more importantly, they know how to not lose any money.
For example, when it was becoming obvious that there was a looming surplus of inner city apartments, lenders in general quickly raised the criteria for lending to those properties to protect themselves. Higher LVR’s and higher interest rates all impact the serviceability of any would be apartment investor and slow down the purchases far more thoroughly than a blanket rule covering ALL investment lending.
What all of this proves is that Brokers are even more valuable now because all of this confusion makes it almost impossible to follow without the help of a professional.
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