An update on the Lending Environment:
Over the past few years, with the rise of property prices, the Government has stepped in to try and slow down the property market, mainly in the bigger cities with a particular focus on Investment properties. This has caused 2 major outcomes for lenders:
- Many lenders have had to change their stance for the allowable borrowings and correspondingly the Loan-to-Value Ratio (LVR) for an Investment property, which in the past could be as much as 95% + Lenders Mortgage Insurance, but now a lot can only do 80%. This ultimately means people considering an investment property need to have more savings/cash deposit which hopefully should cut out a lot of market hype and ultimately slow down the property price surge.
- Many lenders have, and more will follow, in increasing their rates on Investment loans. It has had a negative effect on existing investment property owners but the intent was to make it harder to service a loan in the new environment.
Any questions regarding lending and Investment properties, please do not hesitate to call the WealthPartners office, to discuss this or book a meeting. There are still options for borrowers where they would not be so strongly affected by these industry changes.
Chris Lau – Financial Adviser and Debt Specialist