Maximum Loan Sizes Slashed - News Article

Discussion in 'Loans & Mortgage Brokers' started by RPI, 4th Jan, 2016.

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  1. RPI

    RPI SDA Provider, Town Planner, Former Property Lawyer

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  2. Corey Batt

    Corey Batt Well-Known Member

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    Much of muchness - it shows the marginal declines on singular property basis. The real declines are from the reduction in multi property, multi lender portfolios where declines are in the millions in capacity.

    Obviously that's not as interesting or digestible for main stream media and it's audience of course.
     
  3. euro73

    euro73 Well-Known Member Business Member

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    This news is 6 months old. We brokers on here have been posting about the reduction in borrowing capacity since June 2015.
     
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  4. jins13

    jins13 Well-Known Member

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    Exactly to the tee and shows why the people here are ahead of the pack
     
  5. Redom

    Redom Mortgage Broker Business Plus Member

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    I highly the headline to the article is actually going to hold true this year - that is banks reduce maximum loan sizes provided (under policy). As others have said, changes to servicing policy have made it harder to qualify, but most lenders haven't changed their maximum loan sizes for securities/individuals since all the APRA changes. Don't see why they would either.

    Often their provided to the relatively safe borrowers. E.g. a multi-million dollar business owner may apply for a $4mill PPOR loan on a $10 mill security and have ample cash to meet servicing.

    Cheers,
    Redom
     
  6. albanga

    albanga Well-Known Member

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    @Redom Do you believe the changes have now had adequate time to sink in and if so would you say they are the core reason for the cooling of the Sydney and Melbourne markets?
     
  7. Redom

    Redom Mortgage Broker Business Plus Member

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    To sink in and have market impacts - yes. The impacts are a sustained decrease in borrowing capacities, so i don't view it is a temporary shock that reduces prices for one quarter - that 'shock' will remain and the market will adjust to a different/lower norm in borrowing capacities. That means a fall in demand for investments and lower price growth.

    If you draw a chart of prices, its take the 'peak of' the boom IMO - Sydney may have had another quarter or two to go, but some of this would've taken that away.
     
  8. Taku Ekanayake

    Taku Ekanayake Well-Known Member

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    Hey @Redom,
    Do you think this will affect the Brisbane market as much as it has/will affect the Sydney market?
     
  9. Redom

    Redom Mortgage Broker Business Plus Member

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    Not to sure to be honest - overall investment activity has fallen sharply and that fall is likely to be sustained at a amount of investment activity.

    I suspect with no APRA involvement at all, low rates staying, then Brisbane would've seen a massive surge in investment activity this year. It will likely still see plenty of the investment market share there given its affordability/etc, so they'll get a bigger piece of a smaller pie + its increased O/O activity.
     
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