Many of us may have started investing with the help of high Loan to Value Ratios (LVR’s) and Lenders Mortgage Insurance (LMI) but it looks like those days could be gone!
As many of you know, the Australia Prudential Regulatory Authority (APRA) has responded to affordability issues with much tighter lending criteria for investors. With exuberant housing prices in Sydney and Melbourne it means that despite low interest rates, investor LVR’s will be capped and any new investment borrowers need to service a mortgage rate of 7%+.
Ultimately, the rise of housing values means that many people have more equity to meet tighter requirements but for those investing with cash or who need higher LVR’s, this change could set them back some months until they have a 20% deposit and the serviceability.
In the meantime, here’s a great snapshot of the current changes:http://www.smh.com.au/business/the-economy/apra-has-more-tools-to-tackle-house-prices-says-hsbc-20150520-gh69jt.html