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Some brokers surprisingly upbeat about new lending rules

6 minute read
The Adviser

Smart brokers and investors could ironically benefit from plans to make investor loans more expensive.

The consensus among senior banking figures at this week's Australian Securitisation Forum conference was that APRA would target the booming Sydney and Melbourne investor markets through higher risk weightings for investor loans, which in turn would increase their cost.

Inovayt mortgage advisor Jason Pogorelec, who derives about 75 per cent of his volumes from investors, said his Melbourne firm would probably benefit from such a change.

"I think we'd find investors becoming a lot more educated and a lot more particular about what they enter into," he told The Adviser.

 
 

"It would help the industry become more professional at the same time by keeping operators that operate the right way in business."

My Address Finance founder George Samios, who relies on investors for about half his volumes, said that his Brisbane firm was also likely to benefit from new lending rules.

Mr Samios said the use of macroprudential tools would be nothing more than a "short-term fix" – whereas his business strategy is to educate clients to make long-term financial decisions.

He said his clients would be comfortable to pay more in the short term to reap the long-term rewards of property investment.

He also said an increase in the cost of investor loans would make the market less cluttered, which in turn would open up more opportunities for long-term investors.

However, another Brisbane broker, Mortgage Choice Indooroopilly principal Russell Passfield, said he opposed moves to intervene in the investor market.

Mr Passfield told The Adviser that new lending rules would reduce investor volumes at many brokerages, including his own.

"I don't think the investor market needs cooling across the board. Some markets are hot – Sydney has been crazy, but it doesn't mean Brisbane or Gladstone or Darwin or lots of other places are hot," he said.

The Reserve Bank of Australia announced last month that new lending rules were highly likely to be introduced by the end of the year.

That prompted several industry figures to voice concern about "micromanagement" and "artificial intervention".

Mortgage Choice chief executive Michael Russell and Finsure managing director John Kolenda said last week that new lending rules would do more harm than good.

[Related: Century 21 says lending restrictions will backfire]

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Comments (6)

  • Broker in the Burbs Thursday, 13 November 2014
    <p>"BIS's latest quarterly review of global housing shows Australia as the second most expensive market on a seasonally and inflation-adjusted index of advanced economies.&lt;br /&gt;&lt;br /&gt;On a price to rent ratio (rental yields covering debt cost)shows Australia as one of the highest cost housing markets as well. &lt;br /&gt;&lt;br /&gt;And in Sept 2014, BIS metrics show that Sydney &amp; Melbourne property prices are already cooling". (source SMH) &lt;br /&gt;&lt;br /&gt;So after the fact, here comes the RBA cavalry headed up by Col George Custer....sorry Stevens.&lt;br /&gt;&lt;br /&gt;Lucky us.</p>
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  • <p>The very same bureaucrats who have such a prejudiced and apparently ill informed view of how the financial markets work are now going to attempt to "fix it". Reassuring, isn't it?</p>
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  • <p>Bubble in Australia? Go around the asian tiger countries and you will see what is the real buble in asian real estate like. Prices double within 3-5 months property purchased. Australia at best growth rate 20-30 % in 2-3 years .</p>
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  • <p>you are right there Craig...a band-aide solution for a problem that doesn't even exist. There is no property bubble, the macro statement that the 'Australian' property market is experiencing a bubble is laughable perpetuated be the media looking to sell advertising space in their papers, the most sensationalist (negative) story wins! When in history has any city, regional centre, suburb, street or even built form in that street experienced the same growth or lack thereof at the same time...it hasn't! The government needs to make it easier for people to provide for themselves in retirement, there will be no such thing as a pension for people of my generation and younger!</p>
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  • <p>Missing the point. Investors currently are having to contribute enough 'skin in the game' without the need to hit them with higher rates. Conservative valuations and the need to contribute to lenders mortgage insurance premiums means only those with the 'ability' to invest,can.Investors vreat jobs which in turn provides tax revenue - why discourage it?</p>
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  • <p>More attempts at artificial manipulation of markets by people ill equipped to do so - just what we need!&lt;br /&gt;Make it harder for people to invest, and the outcome is the rich will keep investing, and be able to acquire properties cheaper, and the poor will just have to rely on their super and the pension!&lt;br /&gt;Are these the same people who thought introducing Cane Toads would fix everything ...?</p>
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