Mr Medcraft said the heated property markets in Sydney and Melbourne have the characteristics of a bubble, according to Fairfax reports.
Of specific concern is the SMSF sector, Mr Medcraft said, and warned investors against borrowing to invest in the current market.
While the current interest rate environment is clearly fuelling investors’ appetites, he stressed that rates will not stay at these historic lows for the long term.
“History shows that people don’t know when they are in a bubble until it’s over,” Mr Medcraft said.
“There is always danger when rates get so low. That’s when people start borrowing when they can’t afford it. What generally happens is rates start to rise, which affects your ability to pay, and rate rises can actually bust a bubble so you end up with a double whammy,” he said.
ASIC is continuing to target SMSF property spuikers through the SMSF Taskforce, and recently stressed that property spruiking is the “largest concern” facing the SMSF sector.
Earlier this year, ASIC ordered former company director Steven William Hill to stand trial on fraud charges after an investigation found he recommended investors set up SMSFs for property investment.
Further, ASIC has been pursuing the founder of the Charterhill Group of Companies, George Nowak, announcing in March this year that it has banned Mr Nowak from providing financial services until 3 July 2017 on the basis that he is an undischarged bankrupt.
At the time, ASIC stated it is continuing to investigate the conduct of Mr Nowak and the activities of the Charterhill Group, which operated as a ‘one stop shop’ and with advice to clients including the establishment of SMSFs and the sourcing and purchase of investment properties.
Well, as a matter of fact APRA is stopping banks from lending into an overpriced market. This just happened on Friday. At least big 4 are changing their policies due to pressure from APRA. There will be two major changes. First of all, there will be no more “Interest only” loans for both owner occupied and investment properties. Second, investment loan interest rates will be 0.4-0.5% higher than owner occupied loans. This means speculators will be discouraged from entering the market. This may also stall the price rises.
[quote name=”ANTIBANKER”]Well well if ASIC thinks there may be a bubble why are not ASIC and APRA stopping banks from lending more into an overpriced market.
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and what about the share market – when is that warning coming – or does it not matter if the share market crashes as it will get all superannuation investors equally.
Any warning to super funds that have large commercial property protfolios. No I didn’t think so.
Well well if ASIC thinks there may be a bubble why are not ASIC and APRA stopping banks from lending more into an overpriced market.
Also every time this man speaks he is banging on about SMSF or accountants. Glad to see ASIC have finally taken action against financial planners oh wait what about the Directors of large banks that whilst licensed have been found to have been extremely naughty.
Thats right one rule for small players and another for the big boys.
Medcraft continues to demonstrate a complete lack of understanding regarding the industry he oversees via NCCP. Most lender with whom I deal are using a “qualifying rate” around 8%. So the applicant is pre-assessed to be able to afford the loan when interest rates rise which of course they will eventually.