APRA tipped to target low-balance SMSF loans
The Australian Prudential Regulation Authority may soon inform lenders that they are not allowed to lend to SMSFs that fail to meet certain benchmark requirements with their fund’s balance, one SMSF specialist broker has warned.
While the latest raft of tightening by APRA – including a requirement for the banks to provide additional information to allow lending and mortgage risk to be more appropriately monitored – won’t impact the SMSF sector, the prudential regulator could look to target loans to low balance SMSFs next, according to Thrive Investment Finance owner Samantha Bright.
“There’s a recommendation, and it was actually by the ATO, that people with less than $200,000 in their fund [should] not get a loan, and we’ve seen some of the lenders then adopt rapidly the $200,000 as their minimum fund balance in line with that,” Ms Bright said.
However, there are still some lenders who have yet to adopt this recommendation in their lending criteria, and continue to lend to super funds with balances below $200,000.
Ms Bright said she would not be surprised if instead of being just a guideline and a recommendation, it became a hard benchmark.
“I think that’s probably one of the last frontiers that they could tighten around,” she said.
There is also a possibility that APRA could consider placing restrictions around new properties.
“Certainly if there is any dodgy activity going on, it is with new properties or off-the-plan, so if they were going to target something, that’s one area that they might look to target,” Ms Bright said.
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 has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.