Good News for Property Investors for 2019: APRA announces removal of interest only loan restrictions
The Australian residential property market is looking forward to a very positive start to 2019 following an announcement that from 1 January the financial services regulator, APRA will remove its 30% limit on interest-only residential mortgage lending for banks and other lenders (lAPRA announcement here).
The removal of the cap is expected to help increase competition amongst banks and deliver greater options for property investors looking to finance Australian residential property purchases.
The APRA cap had significantly restricted banks in their ability to offer a range of products to property investors and also lead to inflated pricing for interest-only loans as some lenders increased interest rates on interest only loans to levels significantly above other loan products. The banks did this in order to reduce demand for interest only loans, helping them stay under the APRA cap.
Property investment advisors, finance providers and mortgage brokers have strongly welcomed the news from APRA and are expecting greater flexibility in the products they can offer to clients. Increased competition amongst banks and opportunity for finance is a significant positive for property investors.
It is expected that APRA will maintain a strong eye on lending practices across the market and this is reflected in their statement “APRA expects that ADIs will maintain prudent internal risk limits on interest-only lending”. This level of caution is prudent.
Prospa Property Advisory welcomes the APRA announcement and looks forward to 2019 with a very positive view on the Australian property market. Access to exceptional detailed research and analysis provides our advisors with an extensive knowledge of the Australian property market and the best areas for our clients to invest. With our detailed systems and processes we are able to provide assistance to any property investor, be that someone starting their journey with their first purchase through to the experienced investor looking to accelerate the growth of their property portfolio.
As we look forward to 2019 now is the best opportunity for you to plan and implement your residential investment property strategy.
Contact us today at 1300 660 335 or firstname.lastname@example.org