Tightened Lending Conditions: Hidden Opportunities For Investors


With the latest ABS figures for 2015 showing that the number of loans to investors had dropped by 2 per cent nationally, it was easy for market speculators to conclude that this was purely as a result of tightened lending conditions by the main banks following a 'boom' period in the property market.

Other commentators found further fuel for this argument in the fact that loans to owner occupiers over the same time frame late last year remained virtually unchanged nationally, however according to Aviate Group Managing Director Neil Smoli, there is much more to this figure's consistency than most would care to uncover.

"When most banks and lending institutions issue quarterly data outlining owner-occupier to investor lending ratios, you'll most often find that the definition of 'owner-occupier borrowing' also includes a few less serious debt categories, such as loans taken out by owners in occupancy to either extend or renovate existing mortgaged homes," he said.

Mr Smoli believes that the recently tightened borrowing conditions for investors can also be viewed as a blessing in disguise, not only for first homebuyers - as many are speculating, but also for more strategic investors looking at any potential property investments with a long-term view.

"For a time, investors were becoming accustomed to LVR rates well below 90 per cent, but as we are seeing now,more and more lenders are bringing their LVR requirements for investors back to the 90 percent mark." Aviate Group's Managing Director Neil Smoli[/caption]"Thus, not only is it possible that you might get your investment property for less than expected, meaning you may even be able to borrow less, but you're also likely to benefit from interest rates that are widely to stay the same or drop even further in 2016, not to mention come up against far less competition on auction day."In relation to recently released CoreLogic RP Data figures that revealed the national rental market posted an increase of just 0.3 percent in 2015, a record-low since records began in December 1996, Mr Smoli said this only reinforces the need to take a long term view with any property investment.

"Again, figures such as those released by CoreLogic RP Data require a level head and certainly some market knowledge - or good advice from your experienced adviser, who would almost certainly agree that the glum numbers come with a definite silver lining for investors," Mr Smoli said.

"Furthermore, we always urge our clients to take a strong interest in the fine print - in this case, a more in-depth look at the figures and their breakdowns, as renting Sydneysiders and Melbournians both experienced a rise in rents of 1.9 and 2.2 percent, respectively."Mr Smoli concludes that for astute investors who follow proven steps in selecting an investments property, the current market - or any market which appears not to favour investors, should never be a deterrence, but a potential golden opportunity.

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