What do APRA’s property investment lending changes mean to me as a property investor?


You may have heard that APRA has cracked down on investment lending, influencing many lending institutions to review their investment lending policies.

But we imagine for the majority of you, it’s a case of “APRA, who?”.

In short, APRA are making some changes to investment loans, and we thought you would like to know if and how these changes impact you.

In this article, I take a look at APRA and what they’re doing to keep borrowing conditions stable for you as an investor.

What is APRA?

The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the Australian financial services industry.scale money gold coins balance

Their role is to regulate the behaviour of lenders, banks, credit unions, building societies, general insurance companies, private health insurance agencies, and the superannuation industry.

APRA plays a critical role in protecting you, and the financial well-being of the Australian community, by upholding standards of trade in the financial industry.

Their mission is to establish and enforce standards and practices designed to ensure that under all reasonable circumstances, financial promises made by institutions are met and that our financial industry remains stable, efficient and competitive.

As a consumer, APRA’s activities ensure that you have a reliable, fair financial industry and you can go about your day to day transactions and investments with confidence.

What are APRA’s new measures regarding property investment lending?

In December 2014, APRA wrote to all deposit-taking institutions (such as banks and other lenders) setting out sound lending standards, particularly for investment lending, that included a benchmark for the 10% maximum growth of residential investment mortgages.

This occurred because of concerns over the number of people entering the property investment market and the stability of lending for this market considering current economic conditions.

Their particular focus is on restricting high loan-to-value and high loan-to-income lending, which may be risky for consumers if there should be a rapid or sudden decline in housing values or the property market in general.

They also perceive the rapid growth in property investment lending as risky insofar as Australian consumers may be ‘placing all their eggs in one basket’ and they would prefer to encourage investment diversity amongst consumers.

By taking these measures, APRA is looking to make property market conditions safer for you as a consumer.

By slowing down investment lending, APRA is also looking to slow down the rapid growth in property prices, particularly in Melbourne and Sydney where property prices are considered to be overheated by many property market analysts.

What does this mean for property investment borrowing?

Many lenders and financial institutions are changing their criteria for property investment lending in order to meet APRA’s requirements.

Most major banks have announced that they will be cutting the discounts available on investment loans, which means that interest rates on new investment loans could be slightly higher than interest rates on owner-occupied home loans.

Additionally, most lenders have tightened up their criteria for investment borrowing.

Many are focusing on loan-to-value ratios, meaning you may require a larger deposit than previously and may find it more difficult to leverage properties or access equity to invest further if you are already an investor.

Can I still get a property investment loan?

As your professional mortgage broker, your financial well-being has always been our number one concern.

One of our primary responsibilities has always been to assess your personal financial situation and goals, and ensure that any loan we offer to you suits you, your financial goals, and your expenses.

Before applying for a loan for you, we always take into consideration whether or not you would be able to service your loan in the event that interest rates should rise and recommend insurance products such as mortgage protection insurance and income protection insurance to mitigate the risk of you not being able to meet your loan repayments if faced with a hardship situation.

Plenty of lenders are still offering property investment loans to borrowers who qualify under their new property investment lending criteria.

It is likely that you will still be eligible for a loan and if you are looking to use property investment as a means to build wealth for your future, you should talk to us about your plans and investment goals sooner rather than later.

For more information on APRA, please visit their website.



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Andrew is a leading finance specialist who holds a Diploma of Financial Planning (Financial Services). With over 32 years of experience in finance, Andrew has been acknowledged by the mortgage industry with multiple awards. Visit IntuitiveFinance.Com.Au

'What do APRA’s property investment lending changes mean to me as a property investor?' have 5 comments

    Avatar for Andrew Mirams

    August 1, 2015 WA investor

    The APRA changes have meant a $250k drop in amount my bank was willing to lend me! I had a pre-approval certificate expire in January so just went to renew it. Though my financial position has improved during the year, the effect of the APRA changes has dropped the loan available by 28%.
    I am concerned that this might backfire on the banks. I was interested in purchasing a property in a mortgagee sale post auction. It fell thru at auction because the highest bidder couldn’t raise enough from their bank to pay out the mortgagee bank. If deposits are raised, serviceability rates are increased and rent returns contribute less to serviceability it will definitely take a lot of investors out of the market. If people can’t get loans high enough to even buy out mortgagee properties, prices will drop and I think the banks will be left holding properties with low or negative equity. I think it is ironic that this is one of the things the APRA changes are trying to protect against. If non-investors can see that the market is falling because investors are on the sidelines, they are likely to stay away too which would drop the market further compounding the problem.
    In areas where there are mainly investors rather than owner occupiers – like mining towns – the problem is likely to be worse.
    Any thoughts?


      August 1, 2015 Michael Yardney

      Yes – locations dominated by investors have always been poor areas to invest in. I’ll be doing a long feature article on this in next Friday’s newsletter watch out for it


    Avatar for Andrew Mirams

    July 23, 2015 PhillD

    I recall times when property investment loans were about 1% higher than owner occupier loans; back in the 1990’s. I expect this is why the banks still have two rate tables on their sites; yet the rates and product features today are pretty much the same between the two.


      July 23, 2015 Michael Yardney

      You’re right Pill
      In the past investors had to pay a slightly higher interest rate, then this disappeared and now there are more restrictions on loans to investors. The cycle moves on, doesn’t it?


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