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Enforcing tougher lending criteria is 'ridiculous', says Aussie chief

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Australian Broker | 30 Sep 2014, 08:53 AM Agree 0
The Reserve Bank of Australia is set to front a Senate committee this Thursday to discuss the possibility of enforcing stricter lending rules in an attempt to keep the property market under control
  • Broker Chris | 30 Sep 2014, 09:58 AM Agree 0
    The proposal is missing the mark. Our buisness operates prominently in the investor market, it is very rare that we see an investor gearing greater than 80%. The higher LVR lending remains with the first home buyer. These are the borrowers at risk of negative equity. This should be the area of focus that limits the risk to the banks. Max lvr's of 90% should apply however how do people afford their first home without the help of the first home owners grants. Best way to cool the market is to look at reducing the foreign investors.
  • Bottom Line | 30 Sep 2014, 10:33 AM Agree 0
    There's a problem in 1-2 cities, so the RBA try one sweeping rule, which has the potential to cripple many of the other cities & states. Sounds like the 'Modern Government' way of cracking walnuts with sledgehammers.
    Here's one from left field....try banning the overseas buyers that are paying cash for Australian properties, thereby pushing the market up - with some of these having reps in Aust, that are actually knocking on doors & offering amounts of $1.3mill etc to home owners. Not sure how changing the lending rules is going to combat the cash buyers.
  • Joe Broker | 30 Sep 2014, 06:17 PM Agree 0
    Couldn't agree more with Broker Chris and Bottom Line.I can't get over the extent that it's allowed to happen with foreign investors. Can't they see that? Rather than identify the cause and address that, they come up with another half-baked convoluted idea that stands to create more problems than it could ever hope to solve. Who's paying these people to come up with this stuff?? How out of touch!!!
  • Maria Rigoni | 01 Oct 2014, 10:24 AM Agree 0
    Are we sure this is not just a way to allow the banks to increase interest rates for investment properties? Make it more expensive to hinder demand? I remember the old days around 1991 when investment loan rates were a good deal higher than owner occupied loan rates.
  • Hey MR RBA governor & MacroPrudential Rule Maker | 02 Oct 2014, 08:40 AM Agree 0
    You wanna bring balance back to the market.... make the playing field more level.... it time to to loosen up genuine savings & equity rules for know the people who want & NEED to get into the property market but cant... & while we are at it lets stop penalising them with the double whammy of excessive LMI premium & a loaded interest rate.
    Investors have it too easy. If you have property youve usually had it for a few years & now the GFC is well & trully behind us there is now organic capital appreciation...& thats usually enough to get you over the line for 100%+ leveraging (subject to servicebiility etc) for subsequent property purchases
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