Little lenders slam door on specufestors

Via the AFR:

Heritage Bank, the nation’s second largest mutual, will stop offering property investment loans and is restructuring other products amid fears it will blow tough regulatory speed limits on lending growth after recent attractive offers attracted a deluge of borrowers.

It follows the decision of CUA, the nation’s largest mutual, to stop writing new loans for property investors because demand is so strong.

The combined lenders have about $17.5 billionof assets and account for about 1.5 per cent of the total property lending market.

Their withdrawal from the market highlights continued strength of buyer demand in Melbourne and Sydney at the beginning of peak Spring sales and the inherent disadvantage on smaller lenders of a blanket 10 per cent cap.

If macroprudential 3.0 is needed it should be to cut this cap to 5%.

Comments

  1. The little guys know the government is not going to look out for them when the elephant in the room appears.

  2. Warning this post contains bear porn. Just got an SMS from an agent…

    Good afternoon Gavin, Just letting you know we have a High Density development site of approx 5,640sqm* in Croydon. Urgent Off Market Sale – Looking for offers of $8 million. Section 32 Available. Please call me on 04XX XXX XXX Regards, Stefanie *Blah*

    I love the smell of urgent sales… thing is I am subscribed to a lot of property / real estate newsletters as I’ve been looking for a place to buy all over Melbourne considering different options / lifestyles etc.. In this past week I’ve noticed an uptick in cold calls and off market offerings along with stuff like this… It could of course be nothing but another false start before the summer boom.. but we can only hope it’s going to turn Toronto soon enough..

    • I too am seeing a lot more cold-calls and agents offering off-market or pre-market sales around the upper north shore in Sydney.
      I’m on a lot of mailing lists as I will eventually need a bigger place than the one I am renting but am in no hurry to throw my money away at the top of the market. This time last year I didn’t get a single unsolicited email or call from an agent and in the past 6 weeks have had about one per week. Still ridiculous prices but at least they are chasing after me rather than the other way around.

      • same here. also noting the local agents really becoming a pest in Hampton/ Bayside trying to do valuations get in the door. so much so that we have put in a gate now without an intercom to stop them harassing my wife and family with their door knocking. The amount of junk mail we get from them and related property spruikers recently has been giving a definite “signal” in my view. Interestingly driving around today noticed a number of auctions with hardly any attendees ….

    • commercial market looks like it is correcting simply judging by the number of adverts in major newspapers.

    • Here some update from Sydney southwest. 6 townhouses on glenfield rd are still empty and I am sure this is at least 5 weeks since for lease signs were slapped. These are all new completions.
      Out of 4 properties that are walking distance from my place (300m max) only one sold and this is week 7 since listed. I think people reached their limit of how much they can borrow. From here on only cashed up foreigners or drug dealers will be able to afford to pay higher prices.
      Hence why major parties will not abandon mass immigration.. the only thing keeping the house of cards still standing.

  3. Forgive me for being sceptical but does anyone know anyone who was rejected a loan in the last few months amid these ‘tight lending conditions’? I don’t. But seriously, out of people commenting here, surely all of us know someone buying. In particular Syd and Melb. The couple on the 4 Corners show – high leverage on 5 properties, 2 being completed. They didn’t seem worried re funding??

    • I don’t know anyone first hand but the RE agents that I have been talking to while looking are saying that 3-6 month settlements are the go as people are struggling to find finance. Some deals have fallen through and gone to another party too. On top of that most of the places are going for less than the advertised range i.e. 750 – 800 sells for 720

    • Granny flats are getting popular. People in mortgage stress, bank gives them money for a granny flat, with a view to renting it out. More can kicking and higher density surreptitiously. Don’t need council approval for granny flats as far as I know.

    • My mate who has 3 or 4 properties was made redundant back in March and was right in the middle of securing another one, when the banks actually, surprisingly – called to very employment – so he missed out on the property.

      Anecdotal, yes – but he did say they’d never bothered calling for his previous loans over the past decade.

    • The Penske FileMEMBER

      I work in the broking industry and believe me it’s tighter. More checking, more questions and tighter servicing is reducing approvals. I’ve had a number of people call over the last few weeks who have signed contracts but just won’t settle.

    • Until recently, I used to hang out with the credit risk manager of an FI. I have heard stories of people crying/throwing tantrums when they were told that they could only get refinance for 500K not 650K that was owed. Property prices had not corrected, interest rates hadn’t changed much, their incomes had not changed on the contrary they had gained 3% increase in their incomes but serviciability requirements had changed, it was a slight adjustment and suddenly they were about to lose thier IP. RAMS to the rescue via some dodgy paper work, so that particular FI lost the customer.

      BTW, how do I short RAMS? Specifically RAMS

      • I’m afraid you’ve missed the boat there. You had to do it during the GFC when they crashed and burned. They were then bought out by Westpac.

        So you need to short Westpac and hope RAMS drags them down. Sounds like a good bet in principle. Question of timing though – as always!

  4. Yes I have a friend who is a rentvestor and has been casually looking for a new home to buy (OO). The conditions are getting harder for him and the banks are completely writing off his existing property when assessing him for the new loan.

    Additionally his in laws were out-bid for a small townhouse in Melbourne’s east (nearby) by a person whose funding ended up being rejected.