The number of banks offering self-managed super fund (SMSF) lending has dropped again as another lender announces it is pulling the product from its offering.
AMP has followed similar moves from CBA and Westpac in discontinuing the lending.
The bank said it will continue to support existing SMSF home loan customers, however from November this will not be permitted to switch to interest-only, internally refinance or extend their loan term.
Westpac stopped SMSF home loans for new customers on 31 July, while CBA announced its ban would take effect from 12 October 2018. Both Westpac and CBA will continue to support existing SMSF loan customers.
A spokesperson from the bank said, “AMP Bank will no longer offer its SMSF property loan product, AMP SuperEdge, to new business from 20 October.
“We’re always looking at our portfolio in the context of market trends, customer needs and our approach to risk. The market offering has moved significantly in this space and we are responding to these changes.
“We only ever withdraw solutions for customers after careful consideration and in this case we believe it’s prudent to close AMP SuperEdge to new business.
“We’ll continue to keep the market situation under review.
“We remain committed to our existing customers and are pleased to continue to support them. We are informing customers we will no longer allow switches from Principal & Interest arrangements to Interest Only from 10 November.”
RateCity research director, Sally Tindall, said the writing could be on the wall for SMSF property lending.
“[The] announcement from AMP comes as a shock to no-one,” she said.
“AMP’s new chairman, David Murray, has been one of the most vocal critics of self-managed super fund property lending.”
In 2014, the Financial System Inquiry recommended the government remove the exception to the general prohibition on direct borrowing for limited recourse borrowing arrangements by superannuation funds, although Scott Morrison, who was then treasurer, rejected the recommendation.
Tindall added, “Banks are focused on reducing risk in their loan books. In a falling property market, it’s not surprising we’re seeing lenders retreat from this type of lending.
“Macquarie Bank, Bendigo Bank and Bank of Queensland are now the biggest banks in a dwindling pool of providers offering SMSF property loans.”