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 80 per cent of investment properties in NSW. Previously, ING would lend 95 per cent.
Other banks are likely to make similar (though not identical) decisions over the next 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 already banks have; with some locations a no-go.
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If investors cannot get finance for NSW properties, they are likely to start looking interstate. QLD is the most obvious spot 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 your Origin broker straight away; 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.
