Access to lending about to get easier

Over the last couple of years access to funding has become quite difficult for investors. With the introduction of APRA disallowing lending to investors from banks following the Sydney and Melbourne property booms and then following that was the Royal Commission where banks took self-regulation to a whole new level. These restrictions meant it has been very tough for investors to get into the market. If you have been one of the lucky ones that have been able to get finance and get into the market it is a wonderful time. Yields are high (depending on location) property is very well priced (in some markets) and interest rates are extremely low. One of the big issues that has kept people out has been that the banks have been forced to use a “buffer rate” of 7.5% to assess any loans that potential borrowers already have. However, there is some very good news on the horizon…….

Not only have interest rates dropped even further (as per my previous article) the buffer rate that banks have been applying is also dropping. It is anticipated that the buffer rate should drop down to a couple of percent above the average rates. This means it could be as low as 5.5%. This will make a huge difference to people’s capacity to be able to borrow. When people have better access to money and things flow better, it means that property prices will generally start to move again. If you are looking at getting into the market, it may be a good time.