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APRA mandates 30% limit on interest only resi lending

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Australian Broker | 31 Mar 2017, 09:14 AM Agree 0
The regulator has sent out a letter to ADIs outlining further measures for sound residential mortgage lending practices
  • Broker | 31 Mar 2017, 09:43 AM Agree 0
    What with no consideration to differentiate interest only lending for investors, versus owner occupiers?
    An interest only loan with an offset account can be a practical strategy for owner occupiers, what next a ban on lines of credit too?
    Yet another example of the nanny state stupidity from APRA.
    • Paul The Broker | 31 Mar 2017, 01:39 PM Agree 0
      Wayne Byers needs to get a new job, preferably one doing something he knows about.
  • Really? | 31 Mar 2017, 09:44 AM Agree 0
    Is this just for the country of "NSW/VIC"? What about the other country "SA,NT,WA,QLD,TAS" which haven't experienced the same growth - in some cases valuations coming in lower. Maybe the '2nd country' needs its own APRA head, before they shut those markets completely.
    I guess it gives banks a reason to hike rates again; and will require landlords to hike rents again........
    The best thing we could do to balance the market, is to get rid of APRA completely, and channel those salaries into incentives for first home buyer deposits....
  • Awesome Albert | 31 Mar 2017, 10:04 AM Agree 0
    So much for a deregulated industry.
    The government might as well come out with a standardised servicing calculator that all lenders must use ( oh, that right they basically did by setting the test rate and minimum levels for spending), as well as setting the LVR's and interest rates, ( oh, that's right by requiring lenders to hold more equity on certain products, they are) .
    This is re-regulation by stealth and does nothing to help borrowers.

    If an investor wants to borrow to buy shares they can have an indefinite term and limit margin loan. If they buy commercial property they can continue to roll the facility over.
    If the same investor wants to buy residential property there is a 5-year limit !!

    Are shares really safer than houses??
  • Lex | 31 Mar 2017, 10:14 AM Agree 0
    Perhaps APRA, ASIC & Treasury would like to sit down with my clients & formulate an investment strategy. No Super salary sacrifice, no property investment, warning that the share market may correct. Perhaps shares in a mattress manufacturer as that's what people will be placing their money under shortly. As previously mentioned, the property issue only involves Sydney & Melbourne. APRA have no experience in matters of investment etc & are treading on dangerous ground. Too much push & they could be the cause of a major shift in confidence.
  • Rob Broker | 31 Mar 2017, 10:23 AM Agree 0
    APRA is simply trying to justify it's own existence by making things harder for lenders ,brokers, investors etc.

    God forbid the industry keeps growing rapidly, providing lots of jobs in the financial sector, construction industry, real estate agencies and helping mum and dad investors take charge of their future by building an investment portfolio of properties and providing rental accommodation for thousands of people who can't afford to buy or don't want to!

    Just go away APRA and do something useful. We are managing just fine without you.
  • OzBoy | 31 Mar 2017, 10:26 AM Agree 0
    Ok so this what I don't understand. APRA, ASIC, the government have all stated publicly that Australian Banks are some of the most secure and robust financial institutions in the world and because of this we came out of the GFC a lot better than most. As we all know banks are risk managers that's what they do all day everyday, sure it's with money but ultimately it's all about risk. So with this in mind I have to ask what is APRA's credentials in relation to risk management and how are these greater than the banks? Anyone know?

    Mr Byres said lending on interest-only terms represents nearly 40% of the stock of residential mortgage lending by ADIs – a share that is quite high by international and historical standards. It sure is BUT our negative gearing structure's are far more generous than other country's yet APRA doesn't seem to want to address this. Why? Ok rhetorical I am pretty sure most of us know why!

    The message/s sent out by APRA are confusing at best and this constant tinkering is like death by a thousand cuts and as we have seen over the last 4 years it has done nothing. It's time to take these ineffective, trivial and bank profiteering "rules" out of play, make some changes at a government level that will have a real effect and please let us all get back to reality.
  • Aaron | 31 Mar 2017, 11:47 AM Agree 0
    PPR stamp duty $0, investment stamp duty 15%. Investment market slowed overnight and the banks manipulation ceases
    • Simon | 06 Apr 2017, 08:50 AM Agree 0
      Better yet, PPoR Stamp Duty $0, Investment Stamp Duty $0. Land Tax on PPoR 0%, Land Tax on Investment = a multiple of current rate (~5 years Land Tax to equal stamp duty).

      Move the cost of investment from acquisition to retention - makes the entire market more fluid, and allows for individual growth (and decline) to be based upon what you do, rather than where you start.
  • Just some chicanery | 31 Mar 2017, 11:54 AM Agree 0
    I'll swim against the flow.

    Anyone remember comments in the US as the system collapsed in 2008, needing government socialism (that 'nanny state') to bail everyone out (including bank depositors)??

    I'll remind:

    "where were the authorities??",
    "how did it come to this? The signs were everywhere"
    "Blind Freddy could see the problem building. How did lobbyists keep the Fed and regulators so timid and silent??"

    ..As house prices crunched, families ruined, share market tanked (super anyone?), 4th largest investment bank (Lehman Bros) went bank!rupt (dragging down the rest), and we faced a depression.

    ASIC & APRA are doing what makes sense until the twin elephants in the room finally get euthanised. They need no naming.
    • Anon | 31 Mar 2017, 12:08 PM Agree 0
      Yes some truth in what you say however the acknowledged catalyst was the false reporting of the MBS once that came out everything went pear shaped. I think the frustrating part is that these "measures" are not doing what they are supposed too and blind Freddie can see that they never would. Frustration is taking hold.
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