Credit union eases lending restrictions, launches new investor loan

by Phil McCarroll07 Sep 2016
Major credit union CUA has signalled its intention to attract more residential property investors, announcing an overhaul of its investment products.

CUA yesterday launched its first ever ‘investor only’ home loan and also announced that it has eased lending restrictions that had been in force for investors.

Andy Rigg, CUA chief operating officer for member services, said the moves were part of the credit union’s plans to attract more investors, who currently make up just under one-quarter of CUA’s home loan portfolio.

“While investor activity appears to have slowed down across the market, there are still plenty of investors shopping around for better value and an opportunity to get into the market,” Rigg said.

Available as of yesterday, the Kick Start Variable Home Loan for Investors is a two-year introductory loan that will carry an interest rate of 3.99% p.a. (comparison rate 4.37% p.a.) and will be available to new investors taking a loan with a minimum value of $350,000. A maximum loan to valuation ratio (LVR) of 90% (inclusive of lenders mortgage insurance) will also apply to the loan.

After the two-year introductory period ends the loan will roll onto the investor Fresh Start Basic Variable Home Loan.

As of yesterday for all other investors out a new residential mortgage, CUA will now subject them to a maximum LVR of 95% (including lenders mortgage insurance) across most CUA home loans, the same LVR that applies for owner-occupiers.

An 80% maximum LVR will continue to apply to all borrowers taking out the Fresh Start Basic and Fresh Start Variable home loans.

CUA has been progressively winding back its investor lending restrictions since March 2016; however Rigg said the lender was still committed to maintaining its year-on-year investor balance growth at around 10% p.a., in line with regulatory requirements.

Rigg said CUA timed the announcements to coincide with the start of the spring, which is typically one of the busiest periods for the property market.

“Spring is traditionally a busy time for the market, with more properties for sale and more buyers shopping around, so CUA wants to make sure we have a good value option we can offer to investors. Many of our owner-occupier borrowers also have an investment property, or are looking to buy one, and it’s important we can provide good value on both fronts,” he said.

“We know that buying an investment property is a big decision and one where borrowers appreciate being able to have a personalised conversation about the loan that is right for their circumstances.”