Due to government pressure, banks are making it tougher to buy investment properties. Now, one bank has decided to restrict lending in one particular state. This decision will have a profound impact on which property markets will thrive and which go sideways.
This week, ING announced a reduction in the amount it will lend on investment properties. ING will now only lend up to 80 per cent of investment properties in NSW, and 90% for the rest of Australia!. Previously, ING would have lent up to 95 per cent across the board.
Other banks are likely to make similar (though not identical) decisions over the next few weeks as they scramble to meet the Australian Prudential Regulatory Authority’s (APRA) goal, of limiting property investment growth to 10 per cent per year.
Such decisions are likely to skew the property markets, stimulating growth in new areas especially as they add to the postcodes restrictions that many banks already have, with some locations a no-go.
If investors cannot get finance for NSW properties, then they are likely to start looking interstate. QLD is the most obvious place to where they will turn their attention.
If you are looking to purchase an investment property, what should you do?
One of the most important issues is to be sure you will get finance. Please contact Chan & Naylor Finance straight away on 1300 306 767. Our specialists are on-top of the situation as different banks announce major changes to their lending policy almost daily.
But, given that these policy changes are primarily aimed at calming the Sydney (and Melbourne) markets, we suggest that you stay close to your property strategists such as Metropole and Propertybuyer.
Graeme Salt – National Client Finance Manager, Chan & Naylor Finance Australia
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.