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Property investors to benefit from relaxed APRA lending rules

Australia’s property investors are set to get some relief after the announcement from the Australian Prudential Regulation Authority (APRA) that they will be removing the housing investor loan cap.

In 2014, a temporary 10 per cent cap on investor lending growth was introduced to help cool the booming Sydney and Melbourne housing markets.

The APRA has said that it will introduce more permanent measures now that the cap has “served its purpose”.

According to APRA chairman Wayne Byres: “There has been a clear reduction in higher risk lending, with investor loan growth moderating, interest-only lending declining and high loan-to-valuation lending also markedly lower.

“There have also been improvements in lending policies, increasing the rigour of serviceability assessments for new borrowers. Accompanying this, there has been an uplift in capital resilience, as the industry makes progress towards the ‘unquestionably strong’ targets announced by APRA in mid-2017,” Mr Byres said.

Property investors are set to benefit from the removal of the cap, with some banks set to start increasing investor loan business with enticing discounts.

The news is not so good for first home owners as it could mean increased competition, however an increase in investors in the market may help break the fall of house prices in inner Sydney and Melbourne.

The APRA will continue to monitor housing market conditions to ensure that the removal of the cap doesn’t result in rapid growth from investors.

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