Investor lending changes could backfire: Cigna Wealth's Kent Leicester
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Moves by regulators and banks to curb the growth in investment lending in response to spiralling Sydney and Melbourne property prices could cool the investment market nationwide.
The decision by lenders to raise interest rates on investor loans and other changes to tighten up investment lending was penalising investors.
Changes aimed at trying to simmer the property hot spots of Sydney and Melbourne would needlessly harm investors in other parts of Australia
Not only have there been interest rate rises for investors but also changes to loan servicing calculations and Loan to Value Ratio (LVR) requirements, with the Australian Prudential Regulation Authority (APRA) encouraging the crackdown.
Our economy is in a two speed cycle with the big property price increases focussed on Sydney and Melbourne.
Regulators and lenders need to be careful with how they deal with this as they risk hindering the market in others parts of the country where real estate is not booming.
The lending landscape is changing with a mixed bag of LVR requirements which are now causing a great deal of uncertainty in the market.
Investors in places such as Brisbane and Perth are being unfairly targeted over the property boom in Sydney and Melbourne.
Kent Leicester is managing director of Cigna Wealth and can be contacted here.
