As approvals for interest-only and investor loans take a big tumble, property investors are fearing the worst about their prospects for new loans and refinancing – but experts remain optimistic.
>Despite the banking regulator, APRA, recently removing its investor lending cap of 10 per cent on lenders, investor loans are currently in decline.
The latest APRA statistics show investor home loan approvals fell by 12.4 per cent over the last year to 30 June 2018. Further, interest-only loans took a 54.9 per cent dive in the last quarter.
These results are leaving property investors concerned that the market for financing will grow continually more difficult, compounded by declining values in capital cities like Sydney
Though he’s been a sounding board for many worried investors, the chairman of the Property Investment Professionals of Australia, Peter Koulizos, said it would take a major economic trigger for the financing market to collapse for investors.
“There is no need to go crazy. I can understand why we went crazy straight after the GFC,” he said.
“This was new territory, the last time we had anything like this was in the Great Depression which was 90 years before that; we were unsure what was going to happen.
“Why are we panicking now? Why? Is there something looming on the horizon? Is the global economy going to collapse? I can’t see that? I don’t get it.”
Mr Koulizos admitted he could see why a bank may reject investor lending outright, and noted it would have significant economic ramifications.
“There are three things that are going to cause a property crash. An increase in interest rates, an increase in unemployment or the banks stop lending money,” he said.
“Interest rates are really low, unemployment is really low, but such a large restriction on lending would be initially disastrous.
“I understand why banks think investors are riskier, because if they get spooked, they’ll sell almost at any price, whereas the last thing an owner-occupier’s going to do is sell their own home.”