Today, I have the monumental task of making the topic of prudent banking exciting enough to retain your attention for the few minutes it’ll take to read this article.
Blue Wealth has long advocated a responsible lending and investment philosophy and we support changes that strengthen the industry and ensure your investment journey is a smooth one. We test your ability to hold an asset in a changing investment landscape, be it an environment of increasing interest rates, declining rental yields or dampened growth rates.
If you haven’t had the time to review recent banking changes, I’ll save you the trouble and provide you with the Cliffs Notes:
- Macquarie Bank: Borrowers seeking a loan will be asked for details on their spending in 12 separate categories covering household and discretionary spending to assess eligibility for a loan.
The take away: Who knew that an honest analysis of your costs would be a necessary prerequisite for obtaining a loan! Any changes that improve your ability to hold a property long term gets a tick of approval in my book.
- Westpac: Introduced new rules that require mandatory apartment inspections by a qualified valuer before a final loan offer is made.
The take away: In our experience, we’ve found that physical inspection all but eliminates the risk of adverse valuations at settlement. After all, it’s hard for a valuer to place value on quality from the comfort of their office.
- Commonwealth Bank: Spurred by regulatory constraints on growth in the value of a bank’s investment loan book, interest only home loan rates for investors rose by 12 basis points.
The take away: In a statement, the CEO of the CBA said that the change to its rates had ‘nothing to do with property prices’.
- ANZ: The ANZ extended its switching discretion – a rebate of $1,200 – for new home and investment loans which are refinanced to ANZ.
The take away: The investor loan market remains competitive, with the big four jostling for market share.
Recent lending changes shouldn’t be road blocks to your investment aspirations. Property investing is best suited to a long term strategy, and over time there’ll likely be noise that leads you to question your investment decisions. Just think about how the world has changed over the past two decades: recessions, wars, mining slowdowns, political coups d’etat, nuclear deals, the collapse of some of the largest financial institutions in the world and Trump. A century’s worth of chaos, packed into two decades.
So how do you live above the noise? Get educated, have courage and invest with the support of Blue Wealth.