June lending environment update

While the Reserve Bank of Australia (RBA) has left rates on hold for this month, it doesn’t mean that there haven’t been a lot of changes in lending land.

It’s great to see a bit of competition coming back into the lending market, with some of the banks starting to lift the amount they’re willing to lend to investors. We’re starting to see some 90% loans for investors work their way back in, which is a massive boost for the investment property market as it effectively halves the amount needed to buy that investment property.

Macquarie Bank has released a post code black list, restricting lending in several urban built-up areas. However Macquarie Bank has a disproportionate amount of investment lending on its books, so it’s more of a bank specific situation rather than an industry-wide change.

With last month’s rate drop, we saw a lot of time delays with some funders taking several weeks to pass on the cut. In particular, we’ve seen a number of funders not pass on the full rate cut and we expect to see repeated if there is another. However it’s a great time to get in touch with your broker to check if your current rate stacks up with what is being offered in the market.

We’ve seen credit lighten up in the commercial space, however it is clear that the banks are still really only interested in well structured, strong commercial deals. Second tier funders are being more flexible, but borderline deals are still being left on the table unfunded. Valuations are also tightening up, so if you’re looking at commercial lending make sure that you’ve done your research and numbers properly.