Bankwest will ignore negative gearing tax benefits when calculating investor loans
Bankwest has said it will not take into account negative gearing benefits when determining loan eligibility serviceability.
It means investors will not be able to secure as much in any loan application. It also could apply to existing loans.
It follows on from last week’s announcement when the Commonwealth Bank subsidiary said it was not accepting new applications for refinancing of investment properties.
BankWest has confirmed it will remove the tax advantages of negative gearing when determining whether or not applicants are eligible for investor loans, said a report in The Real Estate Conversation.
The move would mean investors can borrow less from the lender. Also, as another consequence Bankwest would likely be writing fewer investment loans.
The Commonwealth Bank is expected to announce similar moves.
There was speculation in the media that both BankWest and the Commonwealth Bank were close to the 10 per cent growth cap for investor loans set by the Australian Prudential Regulation Authority.
The report cited an Australian Financial Review article quoting Mark Chapman, a director of tax accountants H&R Block, that the rule change would affect existing borrowers.
"The impact of Bankwest's decision on new borrowers is not too bad – they can just borrow through another bank," he said. “But for existing BankWest borrowers, the change is retrospective.”
