Another bank has come out with a Black List of Suburbs where they are restricting lending
Nervous lenders have growing concerns about over-supply of high rise apartment at a time of falling prices and restrictions on foreign buyers.
Most of the big banks have announced tougher measures, with lower LVR’s and requiring evidence of rental cash flows and implementing tougher valuation criteria.
Adelaide Bank has introduced the requirements that apartments have their own bathrooms, kitchens, laundries and windows in key rooms, such as bedrooms and lounge rooms.
Of course, this makes sense – after all these are basic requirements in Australia – aren’t they?
Further – minimum sizes for two bedroom apartments have been doubled to 60 square metres and timeframes for off-the-plan valuations have been reduced from six to three months to “better the risk” and “align acceptance of applications and valuers’ professional indemnity cover”.
Suncorp Bank, has provided brokers with a list of 39 Brisbane postcodes covering more than 100 city and metropolitan suburbs where the new lending restrictions will apply from next Monday.
In general these suburbs had similar characteristics – a large number of new high-density developments.
Under Suncorp’s new lending criteria, it will no longer accept investment loan applications for apartments that do not have a minimum deposit of at least 20 per cent.
Source: Australian Financial Review
THE BIG PROBLEM:
The problem is buyers will have to make up the difference between the purchase price and the final valuation and at the same time find a bigger deposit if the bank will now only lend 70% or 80% of its valuation (not the contract price) when many off the plan buyers were hoping to get either an 85% or 90% LVR when they initially committed to the purchase while others were hoping to make a quick profit expecting to see their properties worth much more than their contract price – not less as seems to be happening more and more.
Unfortunately some purchasers will not be able to settle on their proeprties and risk not only losing their deposit, but being sued by the developers for any losses made by the developer when they resell the property at a lower price.
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