changes are afoot
Are you a property investor? If so things are about to change dramatically for you and your ability to borrow money.
Why?
Rather than focusing on the Chinese (that the FIRB have not been monitoring effectively) and who are buying normal property rather than ‘NEW’ property, you are deemed to be the reason the property market is overheated.
What is changing?
All the parameters associated with lending to investors:
- the current RBA rate is 2.00% (RBA Cash Rate), historical lows.
- the rates offered by the banks to customers range in the 4.00% - 4.50% range (retail rate).
- the current rates used for Serviceability (traditionally 2.00% above the retail rate) are in fact 7.40% - 8.00% (sensitised rate). This buffer is used by the banks to assess ability to repay at average Interest Rates.
- Historically, except for a few lenders, most lenders has assessed their loan to you at the ‘sensitised rate’ but all other loans you have at the actual or ‘retail rate’.
- Within weeks this ‘sensitised rate’ will be applied to all borrowings for an investor.
- The effect of this change will mean that your ability to borrow will be seriously curtailed.
What should you do about it?
If you are looking to invest now, act quickly!
Don’t jump into a bad investment but don’t delay a good investment. Time is truly of the essence.