A Melbourne-based broker and Elite Business Writer believes that regulators will put further restraints on credit for property investors in 2017.
Matthew Mannaert of Acceptance Finance, who came 48th in The Adviser’s Elite Business Writer ranking 2016, specialises in property investment and has seen significant changes in the lending landscape over the last 12 months.
“Originally, we used to have quite a variance in the different servicing levels from different lenders,” he said.
“Given the same parameters, you might be able to lend 300,000. Another lender you might have been able to lend 500,000. Well, that’s all come back into line now, whereas pretty much all the lenders are on the same sort of level.
“They’ve tightened up the buffers and everything that they use for servicing considerably.”
Remarks by APRA’s Wayne Byres and Reserve Bank governor Philip Lowe towards the end of 2016 suggested that more regulatory measures could be imposed on Australian banks.
A number of economists such as AMP Capital Shane Oliver also hinted that a further crackdown could be on the cards.
“I’ve got a feeling that there’ll be further tightening,” Mr Mannaert said.
“From what I’ve read, it seems that APRA and ASIC still believe that the highest risk sector is the investment sector,” he said, adding that this may translate into lower LVRs or tighter serviceability requirements.
“I reckon we’ll definitely see higher interest rates on investment lending.”
In October, APRA announced that it was requesting additional information from Australian banks after observing “a significant gap” in its ability to monitor mortgage lending and risk.
The regulator said that while the quality of loan underwriting in the residential mortgage lending market has improved, APRA is continuing to maintain its close monitoring of investor lending and other areas that may contribute to risks in the housing lending market.
Property Investment Professionals of Australia (PIPA) chair Ben Kingsley believes interest-only mortgages could be targeted.
“They are definitely looking at what’s going on around interest-only lending. That is probably their next area,” he said.
James Mitchell, The Adviser, 17 January 2017