Hiking rates for existing investors is opportunistic

by Julia Corderoy05 Aug 2015
Increasing interest rates for existing investors is an opportunistic move by the banks which could have harmful consequences, claims a property investment association.

The Property Investment Professionals of Australia (PIPA) has claimed that hitting existing investment borrowers is unfair and is now urging regulators and government to take a more balanced approach to creating a sustainable property market.

“Increasing borrowing costs for investors, and in some cases owner occupiers, who bought into the market some time ago seems unfair and detracts from what should be the common goal of creating a balanced property market,” PIPA chair, Ben Kingsley said.

PIPA believes that regulators should adopt a more targeted approach to slow investor lending, instead of using a blunt, blanket approach. 

According to Kinglsey, such measures could include restricting borrowing power for new investors in locations where the market is particularly heated. 

“Above all, the industry needs to be united in slowing investor activity in some markets. While PIPA fully supports responsible lending, we believe going forward APRA should take a more transparent approach, rather than continue its current closed door tactics.”

In respect of transparency, Kingsley is also urging APRA to involve the broader community in a discussion about property investment.

“PIPA is urging the government and regulators to join forces and open this debate to the broader industry. Let us all contribute to this discussion and invest in measures that will create a more balanced property market for the long-term, and strengthen this invaluable component of our economy.”

PIPA is also campaigning for greater education around property investment, as well as regulation of property investment advice.

“While real estate can absolutely be a powerful investment class, people must recognise that not every property in every market will deliver appropriate returns, and in a heated market, the odds are really against you,” Kinglsey said.

“PIPA remains dedicated to supporting a healthy, sustainable property investment industry, where education and appropriate regulation come together to support good outcomes for all stakeholders involved.”
 

COMMENTS

  • by Rob Syd 5/08/2015 8:44:45 AM

    I think banks are taking an opportunity to cash in. They should not target existing investment loans. They should only charge the increase on new investment lending. Here's a thought - How about reducing profit to to share holders.

  • by Allan Faint 5/08/2015 8:49:15 AM

    Imagine thinking the banks would not use any opportunity to increase their already record profits. Only common sense to only increase rates in the hot areas. Why put the brakes on in the rest of the country and force landlords to increase the rents? Will only make it harder for those trying to save.

  • by Frank 5/08/2015 9:06:57 AM

    I agree Rob , APRA has given the power to the banks just like a owner when he releases the PITBULL's ..And once a PITBULL tastes 1st blood he won't want to stop .... Great work APRA on handling the situation I guess you must have invested heavily into bank shares the moment you unclicked the chains