How to get more investment loan?

Rolf, that could be true. But never say it won't change as history have shown, it either goes too far to the left or right. Never perfect in the middle for unknown reason.

 

Aren't the Banks still allowed to lend 30% interest only loans? once they fix the weighting to IO loans wouldn't they lend again?

 

The servicing changes are different to IO restrictions - it's a double barrelled approach where they don't want us borrowing too much AND they want us to pay off the debt we do have.

 

My understanding is that the servicing changes are to bring the interest only loan portions below the 30% limit imposed by APRA, The servicing restrictions are a mechanism used by the banks to bring their lending in line, don't think they are permanent?

 

The servicing restrictions are not there to reduce IO lending, it's to reduce people borrowing more than they can afford to repay.

 

No - the servicing changes have been around longer than the interest only caps. APRA has put in a large number of requirements on banks as to what they deem responsible lending.

This is where it's not just a private market force equation where things will change once things get into line - there's government bureaucracy which is driving this and is a lot more rigid.

Investors really need to understand this is not a bit of tinkering around the edges - the entire financial lending system is being fundamentally changed from multiple angles with various tools at the disposal of the regulators and institutions. There isn't one goal and we're going to see continual market intervention until they otherwise see fit to sit back.

 

Are the servicing restrictions APRA imposed?

 

Yes.

For the most part, everything is direct APRA direction with exception to the interest rate changes, LVR caps etc which are more the response of lenders to try meet the broader targets.

 

Ty Corey for the explanation, albeit grim.

 

Sell those body parts now

 

Question for the brokers. Say you have no borrowing capacity but plenty of equity and a sizable balance in super. How about buying in a SMSF entity?
And if Residental is not possible, then commercial is still a possibility, correct? (Both in and outside of super).

 

The next question is do I feed the addiction or not....

 

Yep.

 

Yep, you can go down the commercial path where the current lease and rental figure can be used for serviceability instead of your own income figures, but you'll still need a sizeable deposit. Or you could go down the SMSF path for resi or commercial if you have enough cash in your fund.

 

1 Mr Govt - we want more competition and consumers to have more choice....but see caveat 2 below.

2 Mr Govt - here are the rules everyone *must* abide by, no one is allowed to do anything different or you face crippling action. Remember 1 above though.

And off we go

 

I disagree, there will be changes to the lending landscape post apra.

The market always finds a way.

Not sure when, or how. But a market full of homogeneous lenders isn't a market, as Rolf said.