APRA crackdown of no consequence to savvy property investors

While the market reacts to the banks’ decision to tighten lending restrictions to investors, Aviate Group Managing Director Neil Smoli has emphasised that for smart investors – those who prioritise their own security – the property investment landscape has not changed.

“Today’s decision by AMP Bank to cease writing new loans to property investors and to raise interest rates for existing investment loans, following the announcement of tighter lending criteria from some other major financiers, will be met with trepidation by some would-be property investors,” Mr Smoli said.

“While it might sound blunt, anyone who is now discouraged from pursuing an investment property was not investment ready to begin with.”

“The increased restrictions that the major banks are placing on investors as a result of APRA’s recent crackdown have been part of our investment analysis process since our inception.

“Property investors who prioritise their own security should actually welcome the changes,” Mr Smoli says.

“For instance, we would never recommend an investor purchase an investment property with anything less than a 20% deposit in the first place. Similarly, if an investor is to find themselves unable to meet loan repayments in the event of interest rate rises, the reality is that it is too soon for them to invest in property.

“So while it appears the regulators are catching up, investors who value their security have no need to rely on APRA or changed conditions from the banks to protect them anyway.

“If tightened investment lending criteria has the impact of dampening demand from speculative property investors focused on short term upside, it may have a positive effect on prices for those investors who rightly view a property investment as a long term prospect.”