January 30, 2018 Linda Hamilton

Why it’s so important to review your investment loans now!

Linda Hamilton

Linda Hamilton

Partner
Linda Hamilton has an abundance of lending and finance experience, enabling her to secure refinancing, home loans and complex commercial requirements for her clients.

APRA’s reinforcement of prudential lending practices commenced in December 2014 – when the regulator first introduced a 10% cap on investment lending growth for Australian Deposit Taking Institutions (ADTI).

Since March 2017 – and coinciding with further restrictions imposed by the prudential regulator to cap interest only repayment types to 30% of “new” lending – the investment lending segment has changed significantly.

Some keys points to note:

  • Over the past 12 months Investors have shied away from the major banks looking for more competitive alternatives, being those institutions not heavily impacted by the regulators supervisory measures.
  • April 2017 saw ADTI’s heavily affected significantly increase standard variable interest rates AND heavily reduced discounting rates for investment loans with interest only repayment types to meet regulatory measures.
  • Resulting from the above points and in conjunction with tightening investment lending policies – investment lending has significantly slowed since June 2017.

So what does all this mean?

The key here is those institutions which applied interest rate increases to their existing loan books – in some instances adding margins of up to 1.20% p.a. – are now offering significantly cheaper deals for “new” bank business.

Client Example:

In January 2018, we assisted a Paris Financial client who refinanced their $870K investment loan.

  • Existing Bank – interest rate 5.06% p.a.
  • Paris Financial sourced Bank – interest rate 4.09% p.a.

This is an outstanding result for our client, the expected annual interest savings to our client is $8,439 approx. in the first year!

Call our team today on 8393 1000 for a no obligation review of your existing lending.

Linda Hamilton, Lending & Finance Partner, Paris Financial

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Linda Hamilton

Linda Hamilton

Partner
Linda Hamilton has an abundance of lending and finance experience, enabling her to secure refinancing, home loans and complex commercial requirements for her clients.

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