AMP the latest lender to ditch SMSF property lending

AMP has announced it will discontinue self-managed super fund (SMSF) property lending.

It will continue to support existing SMSF home loan customers, however, from November they will not be permitted to switch to interest-only, internally refinance or extend their loan term.

The announcement follows similar moves from CBA and Westpac in recent weeks.

Westpac stopped SMSF home loans for new customers on 31 July, while CBA announced its ban would take effect from 12 October 2018.

Both Westpac and CBA will continue to support existing SMSF loan customers.

RateCity research director, Sally Tindall, said the writing could be on the wall for SMSF property lending.

“Today’s announcement from AMP comes as a shock to no-one,” she said.

“AMP’s new chairman, David Murray, has been one of the most vocal critics of self-managed super fund property lending,” she said.

In 2014, the Financial System Inquiry recommended that the government remove the exception to the general prohibition on direct borrowing for limited recourse borrowing arrangements by superannuation funds - although Scott Morrison, who was then treasurer, rejected the recommendation.

“Banks are focused on reducing risk in their loan books. In a falling property market, it’s not surprising we’re seeing lenders retreat from this type of lending,” Tindall said.

“Macquarie Bank, Bendigo Bank and Bank of Queensland are now the biggest banks in a dwindling pool of providers offering SMSF property loans,” she said.

List of lenders offering SMSF loans from next month: