More Good News for Investor Finance

It has just been announced that the regulatory body behind lending (APRA) has just agreed to remove its benchmark on Interest Only Loans to Investors.

The benchmark was brought in back in March 2017 and was designed to slow down the amount of lending to investors in order to cool the Sydney and Melbourne booming property markets. These markets have now cooled, interest only investment loans are at a manageable level and therefore APRA sees no further need to keep these in place.

What does this mean for investors?

In order to reduce the amount of interest only loans to investors the banks had 2 options.

  1. Raise interest rates
  2. Lower LVRs and increase the requirements for servicing

What the banks did was opt for 2. They just made it harder for people to get loans. Now these benchmarks have lifted, the banks no longer need to restrict loans and will now look to increasing profits by gaining market share. This means that it will be easier to get loans over the next few months. This combined with the Royal commission finishing in February means that it will be much easier for investors to get finance which should again have a major up lift on the property markets.