National Australia Bank has warned that regulators could impose more stringent measures to curb investor lending including the removal of negative gearing and adjustments to capital gains tax.
Speaking at the NAB and Advantedge ‘Knowledge is Everything’ event in Sydney this week, Advantedge general manager Brett Halliwell told brokers that they should expect to see more changes as banks adjust to increased regulation around investor lending.
“The key thing to remember is that there will be ongoing changes within this because it is an absolute requirement that all banks meet that 10 per cent investor cap,” Mr Halliwell said.
“While we have seen price changes and we have seen other changes occur, what we won’t see is a new equilibrium form,” Mr Halliwell said, adding that if investor lending continues to grow the banks may be forced to adjust to even tougher regulatory requirements.
“That will lead to another equilibrium, and potentially another equilibrium after that,” he said.
“So I think we can expect to see more ongoing changes in the market going forward in relation to investment caps.”
Also speaking at the event, which was sponsored by The Adviser (sister publication of Mortgage Business), and attended by more than 700 mortgage brokers, was NAB’s executive general manager of partnerships Anthony Waldron, who listed the potential changes that could be implemented if the current regulatory requirements fail to curb investor credit growth.
“It is important to remember what the government and regulators still could do if they don’t get the slowing in the market that they would like,” Mr Waldron said.
“There is a number of other measures they could look to. From removing negative gearing to increasing deposit requirements for investment lending, adjusting capital gains tax and foreign buyer policy.”
Mr Waldron noted the new foreign investment rules announced last week by Treasurer Joe Hockey.
Mortgage brokers and real estate agents who help overseas buyers flout foreign investment rules will face severe penalties under the tougher compliance regime.
Regulators could also inforce postcode and geographical restrictions as they have in New Zealand, or impose LVR caps, Mr Waldron warned.
“There are other items that they absolutely could look to."