The banks, including NAB, AMP, ANZ and Bankwest, have all made changes to their lending practices to slow down the rate of investment and interest-only lending, which in some cases will have implications for SMSF loans, a mortgage broker specialising in SMSF loans told SMSF Adviser.
Thrive Investment Finance Brisbane’s Samantha Bright said while some of the banks have made fairly minimal changes to their lending policies, other institutions have taken significant changes on board.
“The extent of the measures undertaken by each bank is an indication of how large their investment loan book actually is,” said Ms Bright.
AMP confirmed that since May it has sensitised all other expenses an SMSF may have at 7.5 per cent instead of taking actual repayments for loans to SMSFs.
An AMP spokesperson said the bank assesses a customer’s ability to service a loan either through declared monthly repayments or a set factor rate, whichever is higher.
“This approach helps to create a buffer so customers can prepare for interest rate increases in the future, and forms part of AMP’s prudential lending,” AMP said in a statement.
Meanwhile, Bankwest said it had reviewed the acceptable loan to value ratio for investment purposes to ensure sustainable growth in the investment loan sector to protect both investors and the loan market.
An ANZ spokesperson said that for interest-only lending, ANZ will offer only advertised rates, with no discretionary pricing available.
Ms Bright said SMSFs that are looking to borrow and have the ability to provide good deposits and demonstrate affordability easily are unlikely to be impacted by the changes to lending.
“Someone who’s looking for their second or subsequent investment property may, however, see that their borrowing power has been impacted,” she said.
SMSFs that were borderline in their ability to obtain a loan before the changes were implemented should perhaps reconsider their choice to borrow anyway, and will certainly not be able to obtain a loan now, following these changes, Ms Bright said.
I feel that as advisers, we need to mindful of the “gearing risk” and the safety of jobs/contributions.
Take into account the age of the clients and long term goals.
We tend to adjust LVR to meet the risk profile of clients.
I must be misunderstanding this article. The article is title crackdown on SMSF lending continues but the changes detailed in the story relate to non SMSF loans which have not been passed on in SMSF policies (yet).