Another major lender scraps SMSF loans for residential property
One of the non-major banks has announced that it will stop offering SMSF loans for residential property from the end of next month, following a spate of lenders that exited the space last year.
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.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.