Further to the changes we’ve seen recently (you can read about those here), there’s been some more developments with regards to how APRA wants the lenders to operate.
In addition to ordering ADI’s to limit the growth of their investment loan book, APRA now wants the major banks to hold more funds in capital reserve. In other words, banks need to have more cash.
Similarly with APRA’s other recommendations, each lender will attempt to satisfy the new guidelines in their own way.
Specifically, some of the strategies that the major lenders have announced so far include:
- Increasing interest rates on existing variable rate investment loans – This means that if you have an existing investment loan, the interest rate may rise – even though the ‘standard variable rate’ has not increased
- Increasing interest rates on fixed rate investment loans
- Increasing interest rates on existing Interest Only home loans – This means that if you have an existing Interest Only loan, the interest rate may rise – even though the ‘standard variable rate’ has not increased
- Ceasing to offer new investment loans altogether
Like last time, the turnaround time is extremely quick with some lenders only just announcing changes that will take effect later this month. It’s extremely important that you know what your lender is doing and how the changes are going to affect your existing loans.
Something to think about…
Did you initially purchase your home as an investment property (with an ‘investment loan’) and then moved in after it had been rented for a while?
Once you moved in, did you change the loan type over from an ‘investment loan’ to a ‘home loan’?
If you’re one of the many who didn’t bother to do this (there was no real benefit in the past), it’s something you may want to consider doing sooner rather than later. Otherwise, you may pay a higher rate of interest on a loan that is ‘investment loan’ in name only.
Remember that we are only an email (or phone call) away if you need any help, or want to have a chat about your personal situation.
