Investment Lending Regulations cap ‘reaching end of useful life’: APRA

The head of banking regulator APRA (Australian Prudential Regulation Authority) has motioned it could ditch its 10 per cent cap on lending to property investors as the measure is “probably reaching the end of its useful life”.

APRA chairman Wayne Byres said the restriction, introduced in 2014, might be becoming “redundant” as bank lending standards had improved, while credit growth had dropped sharply.

“The 10 per cent investor growth benchmark we introduced some years ago now, it’s probably reaching the end of its useful life,” Mr Byres told a Senate estimates committee in the nation’s Capital.

This is great news for all property investors out there. If you know anything about property growth, it has an intrinsic tie to the lending market. We know that when banks are lending money, there’s a good chance that property prices are going up as a result of competition in the market.

The below graph from the RBA and J.P. Morgan shows Investor Housing Credit Growth as a percentage. We expect that the position at the beginning of the year (outlined by the red circle) will not only go up in the coming months as lenders catch up with the recent news from APRA but will do so sharply.

 

What does this mean for you?

This will no doubt spark a rise in capital growth, particularly in cities like Brisbane, Adelaide and Hobart, where prices never had a chance to normalize in line with Sydney and Melbourne as per historical trends.

So to keep a very long story short – one that dates back to 2014 – if you are looking to get into the market, you don’t want to miss this amazing opportunity. All successful investors comment about timing, and this opportunity is presenting itself right now. Not only will you again be able to get the lending you require, but you will no doubt be poised and ready to take advantage of expected large capital growth trends.

If you need help navigating this article or finding a suitable investment please don’t hesitate to get in contact with us. You can call us on 1300 473 347 or email me directly at jrussell@nexusprivate.com.au.

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