Impact of move to 80% LVRs for investors

Discussion in 'Property Market Economics' started by Pins, 7th Jul, 2015.

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  1. euro73

    euro73 Well-Known Member Business Member

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    Unfortunately this is going to have little or no impact at all now. Used to work. Wont work now. The banks have taken away far more capacity in the past few weeks than a $20-30 per week rental increase can substitute. I dont wish to be brutal or mean or dismissive, but APRA wants 30% less I/O capacity in the market. That's a 3 and a zero. That's massive. With the additional loading now being applied by most lenders, capped LVR's , removal of neg gearing by some and more tightening to come, you would need rents to be increasing by at least 20% per annum just to break even/retain your previous capacity, right now. In most cases, you will find that you can borrow far less today than you could borrow just a couple of weeks ago. In fact, most investors will find that if they wish to refinance just their existing debts, they wont requalify.Many will not be able to renew I/O terms.
    If it's me, I'd be getting hold of one of the posters here who really understand this stuff, and be looking to move any I/O debt ( especially the sub 80% deals) that is due to expire in the coming year or two, across to a non bank lender right now where I can still get a new 5 or 10 years I/O, and while they are still open to taking OFI actuals. Otherwise, lots of investors are going to find themselves stuck where they are, unable to refinance on favourable terms (or at all) and be facing P&I when their existing I/O term expires.
     
    Last edited: 13th Jul, 2015
    Terry_w likes this.