07 Jul Lenders push new property loans to the limit
Lenders are offering new property investment deals that test the limits of the regulator’s 10 per cent speed bump, fuelling fears that recent rate cuts might be inflating a property bubble.
The warnings conflict with the Reserve Bank of Australia’s (RBA) assurances that the recent rebound in demand will not last.
Lenders are launching new offerings and repackaging products that were shelved after the Australian Prudential Regulation Authority (APRA) imposed a 10 per cent speed limit on annual investment growth in December 2014.
Brokers say an alternative strategy is for lenders to provide more-generous terms to borrowers and deals that they have confidence will comfortably meet terms and conditions.
“Lenders are very choosy about who gets the better deals,” said Christopher Foster-Ramsay, chief of Foster-Ramsay Finance.
“The new offers are limited because they want to remain under the 10 per cent limit. If they rush out and do too many deals to too many borrowers they will quickly use up their allocation,” said Foster-Ramsay.