50% of My Predictions for 2016 Were Wrong

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I will give myself a 50 per cent pass mark for my 2016 predictions.

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At the end of 2015 I predicted that:

    • Commercial lending would continue to grow – I got this right
    • The Sydney and Melbourne residential market growth would draw to halt – I got this hopelessly wrong

Thankfully, I am not shy of sticking my neck out and am happy to make more predictions for 2017

    • The growth in Sydney and Melbourne will draw to a halt (this prediction must be surely be right somewhere between now and 2020)
    • Commercial lending will continue – but with limited focus on development

Pressure from the “Australian Prudential Regulation Authority” is already impacting on the mindset of most of our lenders. Having been set a ‘speed bump’ of 10 per cent annual growth in investment lending many lenders are applying the brakes when it looks like things are going too quickly.

This week most lenders voluntarily increased their investor and interest-only rates, partly due to concern that they were getting to close to APRA’s speed limit.

Recent APRA data shows that the banks were experiencing the following growth in investor lending

Westpac 7.8 per cent

NAB 5.5 per cent

CBA 8.2 per cent

We are likely to see more of the banks make it tougher to get an investor loan. However, help is at hand, your C&N brokers have a few tricks where they can get investor loans at owner occupied rates.

Commercial lending is an altogether different beast – driven by different dynamics. Concerned about an oversupply of new apartments in the Eastern capital cities, most banks are simply not lending to developers

But in other areas, banks are keen to lend to businesses, trusts, partnerships and companies.

In 2017 it will be harder for investors to get a residential loan. But borrowing to purchase a commercial property – or even to fund a business idea is something for which the banks will retain a healthy appetite.

Graeme Salt - Chan & Naylor Finance

Graeme Salt


Disclaimer: This article contains general information; before you make any financial or investment decision you should seek professional advice to take into account your individual objectives, financial situation and individual needs. Click for more detail regarding this disclaimer.

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