Macquarie Group has announced that, from 30 April 2019, it will no longer offer SMSF residential home loans.
Macquarie stated that any applications in progress for SMSF residential home loans will need to be settled by 30 June 2019.
In a public statement, the bank said that its decision to withdraw from SMSF lending for residential property is part of its plans to “streamline its core home loan offering”.
This latest announcement follows similar moves from other banks, with Westpac, AMP and the Commonwealth Bank of Australia all ceasing their SMSF loan products last year for both residential and commercial property.
ANZ never really played in the space while NAB stopped offering SMSF loans for residential property in 2015.
With the government also planning to introduce a new measure that will include the outstanding balance of certain limited recourse borrowing arrangements (LRBAs) in the calculation of a member’s total superannuation balance, the options with SMSF borrowing are becoming increasingly limited.
The measure, if passed, will apply to SMSF members that have satisfied a condition of release with a nil cashing restriction or those with a related party loan.
Australian Executor Trustees technical services manager Julie Steed previously told SMSF Adviser that including the outstanding balance of an LRBA where it’s a related party, it is going to become quite problematic given the number of lenders that exited SMSF lending.
While Ms Steed said there are still a number of second-tier lenders operating in the SMSF loans space, SMSF professionals and their clients need to ensure they are working with a lender that specialises in this area to avoid running into any compliance issues.
Where a loan for an SMSF is not properly structured as an LRBA, this can result in the SMSF breaching legislative provisions, she warned.
SMSF borrowings only arose from the Telstra Instalment Warrant Issue. The government realised their error and then provided legislation to back-fit what had already been done. They probably should have written better/tighter legislation. But being cynical, it really has suited the government to have SMSF’s enter the housing market as providers of rental properties, and also buyers to keep the economy moving. They would look at the billions of cash locked in SMSFs and figured their legislation would help move the economy along by harnessing the wealth that SMSFs offer as a collective.
In the past 10 or so year we have seen the big financial service firms jump aboard what they perceived was the SMSF gravy train.
Equity gearing, property gearing, advice & administration services were targeted in the pursuit of FUM & profit.
Big firms just dont understand the mindset of SMSF trustees. They are for the most part independent investors, seeking specialist advice, product & services. Something that the production lines of big firms continually fail to deliver.
All banks have now abandoned advice & have ceased lending.
In administration ING / ANZ failed to gain traction with its acquisition of the original Super Concepts. Perpetual failed with its $16m acquisition of smartsuper. CBA & NAB disposed their loss making administration businesses.
Only AMP survives with its $100m+ investment in the rebirting of the SuperConcepts brand. Recent published results indicates this is also struggling with declining software & administration numbers.
The SMSF sector cost the big firms big dollars & has been the graveyard of many financial service executives. When will they learn that it is best left to specialist advisers & administrators who can provide quality on time advice & service