While the Reserve Bank has dropped interest rates, APRA (Australian Prudential Regulation Authority) is trying to cool Sydney’s housing market by scrutinizing banks’ lending policies for investment purposes. This has led to many lending policy changes by the major four banks in the last few weeks, specifically in regards to investment lending, including changes to the LVR (Loan to Valuation Ratio), SMSF (Self-Managed Super Fund) lending and types of acceptable income.
Applying for your first home loan can be a daunting task and I’m often amazed at the preconceptions people have about lending policy. So what do you need to know and what are the banks looking for?
Lending policy falls into two main areas – 1. Security and 2. Serviceability.