Via the AFR:
ING is banning the use of some residential property as security for commercial loans in the latest sign that lenders are growing nervous about the outlook for property price growth.
Commercial loan borrowers will also have to provide case-by-case evidence of higher levels of equity in their residential property, a proven record for making profits and ability to provide specialist management.
Residential property will no longer be an acceptable security on a standalone basis but will be acceptable if used for mixed purposes, such as a combination of commercial and residential.
The maximum loan-to-value ratio for these properties has been reduced by 5 per cent to 75 per cent.
In addition, equity release against residential collateral will be restricted to 20 per cent of the property value.
One must always remember that falling property prices come with their own incremental credit tightening. Rate hikes my butt.
