“As we enter the new year it doesn't look like things are going to get easier in the qualification for investment home loans, in fact it looks like it is going to get a whole lot harder,” Andrew Harrison of Key Invest Lending Services told Mortgage Business.
“The latest consultation paper from the Basel Committee proposes higher capital requirements specifically on investment loans and predicted rate rises.
“Behind the scenes there is no doubt we will see a further sharpening of policy surrounding the qualification criteria for investment loans,” he said. “This could be in the form of these types of loans requiring a higher deposit or instead of allowing 80 per cent of rental income towards serviceability, a lower threshold could be set.
“Even worse both of these types of changes could be implemented simultaneously which would preclude a large proportion of Australians from beginning or expanding their property investments.”
Despite the regulatory changes of 2015, which saw banks introduce two-tiered pricing and lift their variable rates to offset additional capital requirements, Mr Harrison said investors should buy now to avoid facing further lending curbs.
“It would be prudent if you wish to purchase an investment property in 2016 and you think you may struggle to meet a higher deposit and/or you would rely upon the rental income to service your investment loan that sooner rather than later would be a good time to buy that investment property,” he said.
Mr Harrison, who is based in South Australia, was named the winner of last year’s inaugural Investors Choice Award for mortgage broking.