Investment Loan Rate Increased? Investment Loan Review

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Has your investment loan interest rate increased? Don’t be ripped off, get an investment loan review

If your investment loan rate has recently increased or it has been a while since you had it reviewed you may want to get an investment loan review to check if there are any better options available.

What is going on with investment loans?

If you have been ignoring the chatter in the media about property prices and investment lending you may not be aware that the Government Banking Regulator (Australian Prudential Regulatory Authority or APRA) has been putting pressure on the banks to curb their investment lending if they have their investment loan books growth above 10%.
The offending banks and even some banks that were not above APRA’s 10% investment loan growth limit have responded in a number of ways:

1. Raising their investment loan interest rates including for existing variable rate investor loans;
2. Changing their borrowing power calculations to make it harder for property investors to qualify for a loan;
3. Limiting investment loan to value ratios to lower levels; and
4. Decreasing their interest rates for owner occupied loans to encourage more owner occupier borrowers and even out their loan books.

Not all offending banks are doing all of the above.

Are there still good investment loan interest rates available?

Yes,there are still good investment loan interest rates available! Not all lenders have exceeded APRA’s 10% investment loan growth limit and some lenders are still actively competing to get your investment loan. These other lenders are still offering competitive investment property interest rate, fee and feature packages.
As property investors we know how important it is to have a competitive interest rate on your investment loan. If you are paying more interest than the rental income, negative gearing may make up some of the difference but even with negative gearing you are still paying money out of your own pocket. This can impact on your ability to make further investments and or your lifestyle. Lets face it no one want to pay more than they need to on their loan, least of all property investors who are investing to make money.

Are higher loan to value ratio investment loans still available?

Yes, higher loan to value ratio investment loans are still available! Some lenders are also still offering higher loan to value ratio loans 90% or up to 95% LVR exclusive of lenders mortgage insurance for investment properties.

Find out more about higher LVR investment loans

With the recent lending changes some banks have stopped offering higher loan to value ratio loans for property investors. Other lenders are still happy to lend at higher LVRs up to 90% or 95%.

High LVR investment loans

Investment loan review – Free

If your investment loan rate recently went up then you should get your investment loans reviewed by one of our finance professionals that understand investment loans. Oak Laurel has mortgage brokers that know which lenders have the good investment loan rates now. Or brokers can assist you to switch your investment loan portfolio to where there is a better loan package from another lender. If you have one investment property or many investment properties, our investment loans specialists will review your loan portfolio to identify if they can get you a better loan or loans. If you also have an owner occupied home loan(s) our finance professionals can check to see if there is something better available for that also.
We will not charge you for the review. If we cannot find any better options then there is no loss to you. However, you can be confident that you are not being ripped off. If we can find you better options then it could save you a lot of money.

Contact an Oak Laurel about an investment loan review!

Don’t delay act NOW!

+614 30129662

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Construction Costs in Australia Decreasing

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Construction cost in Australia are among the most expensive in the world but are coming down according to an international report.

A report by Turner & Townsend a multinational professional services company ranked Sydney at 10th, Perth at 16th, Melbourne at 19th and Brisbane at 20th most expensive cities in the world for construction costs.
The study analysed 35 residential and commercial projects in different markets around the world and found that New York is the most expensive place to undertake construction activities.

Markets analysed and the report’s predicted construction market in next 12 months included:

Cooler	Staying the same	Warmer
Australia – Perth	Australia – Melbourne	Australia – Sydney
Brazil	Canada	Doha
China	Chile	Hong Kong
Kazakhstan	Germany	Ireland
Malaysia	India	Kenya
Russia	Japan	Netherlands
Singpore	Poland	UAE
Uganda	South Africa	UK – Central
–	South Korea	UK – London
–	Vietnam	UK – North
–	–	UK – Northern Ireland
–	–	UK – Scottland
–	–	UK – South
–	–	USA – Houston
–	–	USA – New York City
–	–	USA – Seattle

Construction market in Australia

According to Sourceable Senior economist Gary Emmett from Turner & Townsend said Australia is becoming a relatively cheaper place to build, due to low interest rates and a falling Australian dollar.

“The 2015 report shows that compared to 2011, it would cost overseas investors paying in US dollars 13 per cent less to construct buildings in Australia, which is a significant reduction,” he said.

Mr Emmett said that with the exception of Sydney’s apartment market, the cost of construction is stable and the outlook moderate for the medium term.
“Overall, it is a great time to build. Construction costs should remain fairly stable although some residential construction trades may become increasingly difficult to source, adding pressure to costs,” he said.
“Foreign investors are expected to seek more opportunities here to capitalise on the favourable conditions to build projects.”

Construction cost per square meter in Australian cities

The Turner & Townsend report estimated construction costs of detached houses, townhouses, low rise apartments and high rise apartments in the Australian cities Brisbane, Melbourne, Perth and Sydney.

Detached house construction costs per square meter in Australian cities

The construction cost of building a detached house is $1,600 per square metre in Melbourne, $1,650 in Brisbane and Perth, and $1,750 in Sydney.

Building a prestige detached house costs $2,700 per square metre in Melbourne, $2,850 in Sydney, and $3,000 in Brisbane and Perth.

Townhouse construction costs per square meter in Australian cities

Townhouses construction cost $1,700 per square metre in Brisbane, $1,750 in Melbourne, $1,850 in Perth and $1,900 in Sydney.

Low-rise building costs per square meter in Australian cities

Construction costs to build low-rise apartments are $1,800 per square metre in Brisbane, $1,900 in Perth, $1,960 in Melbourne and $2,100 in Sydney.

High-rise construction costs per square meter in Australian cities

High-rise apartments building cost $2,500 per square metre in Brisbane, $2,700 in Melbourne and Sydney, and $2,900 in Perth.

Borrowing to build your dream home or a small development project?

A construction loan may be a good choice for a single dwelling (house, townhouse or unit) or up to 4 dwellings (houses, townhouses or units on a single title - prior to subdivision) in a small property development. Find out about Construction loans here:

Construction loans

Borrowing to build a larger property development project?

Larger property development projects (multi-dwelling developments - houses, townhouses, units or apartments) require specialised construction finance.

Property development finance

Oak Laurel – Construction and development finance made easy!

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SMSF loans will not be banned says assistant treasurer

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Self Managed Super Fund loans will not be banned but may face tougher regulation says assistant treasurer

Whilst speaking at the Tax Institute annual superannuation conference in Sydney on Friday 21 Aug 2015, Josh Frydenberg the assistant treasurer stated that the Government has no plans to ban SMSF loans, that is limited recourse borrowing arrangements (LRBAs) through SMSFs to purchase real estate according to Fairfax.
David Murray’s Financial System Inquiry, released in December 2014, warned that SMSF borrowing for property increased speculative investment which could pose a risk to the financial system over time and called for a ban on LRBAs,
“I want to emphasise that we have been considering this recommendation very carefully but flag that we want to make sure the approach we take is proportionate to the risks that have been identified,” Frydenberg said.
“To put it in context only 0.07%, perhaps 6,500 properties, were held in an SMSF through a limited recourse borrowing arrangement in 2013.
“David Murray highlighted the risks associated with increased leverage in the financial system. Increased leverage always represents a risk and we recognise that. The government also recognises that most SMSFs do the right thing.”
When asked whether there were any plans for increased regulation of SMSF loans – instead of completely prohibiting it – Fairfax reports that the assistant treasurer said it was “under consideration”.
This appears to be good news for those taking control of their Superannuation through SMSFs. Though clearly not for everyone, borrowing to investing in property through your SMSF remains an option. It is suggested that you seek advice from a qualified professional before making any investment choices though your self managed super fund. If you are considering borrowing to invest in your SMSF we can provide you with Limited Recourse Borrowing Arrangements for your SMSF.

Borrowing to purchase property in your Self Managed Super Fund?

Ask an Oak Laurel mortgage broker about your Self Managed Super Fund loan options.

SMSF loans

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Is Melbourne overtaking Sydney as the hottest property market? Aug 2015

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Property price growth data shows that in the last Quarter, Melbourne property has out paced Sydney’s to become Australia’s hottest property market as at Aug 2015

Property price growth in Melbourne and Sydney

Latest property price data from PRData shows that in the last quarter Melbourne property price grew 7.85% out pacing Sydney price growth at 6.66%. Month on month price data also shows a similar trend, Melbourne price growth outpacing Sydney’s, overall and for houses. Though Sydney’s unit prices grew faster than Melbourne the difference was only 0.06% between the two or in practical terms they were the same.
In recent years Melbourne has shown some reasonable price growth but until the last quarter have been outpacing Melbourne’s by a large amount. With Sydney’s property prices now so high many believe that they are unaffordable. There have also been reports that property investors looking to buy in Sydney have been turned off by the high prices and are now turning to Melbourne where prices have been rising at steady pace. Now that Melbourne’s price growth appears to have overtaken Sydney’s investors chasing capital gains may also be more attracted to Melbourne.
Melbourne property has not had the attention from property investors that Sydney has had with a larger proportion of owner occupiers. However, if investors now find Sydney too expensive or decide to target Melbourne which has in the last quarter become the hottest property market, this may be the start of a flood of investors to Melbourne property.

Auction clearance rates in Melbourne and Sydney

Recent auction clearance rates show a similar trend to the property price growth in Melbourne and Sydney. Over previous five weeks Melbourne’s auction clearance rates have shown a steady building increase from 74% five week ago to 75%, 76% , 77% to 80%.  Sydney’s auction clearance rate though having 80% last week have showed a decreasing rate previously from 78% five weeks ago to 76%, 76%, 73% before last weeks jump back to 80%.

Is Melbourne a good place to invest in property?

Invest where people want to live, especially where people who have wealth want to live as this is the demand side of what drives up property prices. People want to live in Melbourne. Melbourne has been named the world’s most liveable city for the fifth year in a row, achieving a near perfect score on the Economist Intelligence Unit’s (EIU) liveability survey of 140 cities. Each year thousands more people move from NSW, mostly Sydney to Victoria, mostly Melbourne than go the other way. Melbourne has the greatest number of people immigrating to it than any other Australian city. The ABS forecasts that given current levels of migration and fertility rates, Melbourne will overtake Sydney as Australia’s biggest city by 2053.
It is not all Melbourne’s way though. Vacancy rates in Melbourne at 2.3% are however, slightly above that in Sydney at 1.8% as of July 2015, according to SQM research data. However, both cities have lower than the national average vacancy rate at 2.4%.
Latest data also shows that rental yields are also slightly lower in Melbourne than in Sydney.

Conclusion

This data does not mean that Sydney’s property prices will not continue to grow, there is every indication that the it will continue to grow into the future. The data does suggest that Melbourne is now the hottest property market and may catch up to Sydney over the coming years.
Only time will tell if Melbourne will continue to be Australia’s hottest property market!

Want to talk to one of our Melbourne based mortgage brokers?

We have mortgage brokers around Australia. Do you want to talk to one of our mortgage brokers in Melbourne? Click here:

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Want to talk to one of our mortgage brokers in Sydney?

Contact our Sydney based mortgage brokers to discuss your mortgage needs whether it is for an owner occupied property or investment property. Click here:

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Good investment loans easy to find in Australia

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Whoever said that it was hard or expensive to get an investment loan must have been looking for one in their own navel. Many lenders are still actively competing for investors as they have not exceeded the Government Banking Regulator’s 10% investment lending growth ‘speed limit’.

Many lenders are still offering loans to investors at higher loan to value ratios and competitive interest rates. The major banks who have exceeded the Government Regulator’s investor growth limit are getting out of investment loans and some are now spruiking that the investment market is dead.  This smacks of If I can’t play I will close my eyes and shout that the property market over. But with so much demand for property in Australia’s two largest cities, Sydney and Melbourne, no one wants to hesitate only to have to pay thousands more for a comparable property next week. Anyone who has attended an Auction in Sydney or Melbourne recently knows that the demand is stronger than ever as are prices.

Here is the tip to getting a good investment loan. Don’t bother going into a bank branch. Don’t bother going to a mortgage broker that is owned by a bank. These places don’t give you a lot of choice even if you are not an investor. Go to an independently owned mortgage broker who has access to a wide range of lenders including non-bank lenders. You will find out that there is plenty on offer for property investors with competitive loan packages to boot. Find more info about what kinds of investment loans are still available here: investment loans

Now that the big banks are out of investment lending they have started talking down the property market prospects, it does not even matter that the data says the opposite. There may be an affordability issue in Sydney but the Melbourne market median house prices are around $200,000 cheaper than Sydney and are just starting to really take off. The most recent property price growth data shows that Melbourne has overtaking Sydney as the fastest price growth city and prices are growing even faster than before. The big banks may be disappointed that they can’t lend to investors in this growing market but this will just give the lesser known lender a chance to show off their investor loans expand their investor market share. These new Government Regulator measure are levelling the playing field for lenders and introducing more competition that is long overdue.


 By Dr Nigel Abery (PhD) 

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Federal Government Treasurer’s new measures for illegal foreign property purchases

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Australian Federal Government Treasurer Joe Hockey announces proposed new measures to crackdown on illegal foreign property purchases.

Today 8 August 2015, Joe Hockey Federal Government Treasurer, announced that the law will be changed so that foreign investors breaking the law and purchasing established properties (instead of new properties) will be forced to forfeit capital gains on the property and will be fined 25% of the purchase price or 25% of the property value. Temporary residents can still purchase existing properties to live in whilst they are residing in Australia so long as they sell the property if they permanently depart Australia.
There is currently a moratorium on criminal charges for foreign investors self reporting that they have broken the rules. However, those that have broken the rules will still be required to sell the properties.
It has been reported that 400 Australian properties are under investigation for being illegally purchased by foreigners. However, it is acknowledged that the vast majority of (Chinese) foreign property investors are complying with the Foreign Investment Rules.
The rules on foreigners purchasing Australian property are quite simple and easy to comply with. Non-residents must obtain approval from the Foreign Investment Review Board (FIRB) and generally can only purchase new properties. If they are a temporary resident they may be able to purchase an existing property to live in whilst that reside in Australia. The Foreign Investment Review Board may grant permission to purchase existing property for the purpose of redevelopment to increase the supply of property. However, it is unlikely that the existing property will be able to be rented out / leased whilst it is waiting to be re-developed.
The Government has already announced that it is introducing a new fee/tax for foreigners applying to purchase property in Australia. However, this is not expected to reduce demand from foreigners for Australian property.

Non-residents can borrow to purchase property in Australia

Did you know that some banks will lend to non-residents to purchase property in Australia? Find out more about mortgages for non-residents here:

Non-resident mortgages

Are you a property developer?

The Government is encouraging new dwelling supply. Ask us about your property development finance options. Non-resident can also borrow from Australian lenders to for development projects. The criteria have become stricter for both non-residents and Australian residents. Find about property development finance here:

Property development finance

Are you a temporary resident?

Did you know that temporary residents like 457 visa holders can borrow to buy property in Australia? Find out about home loans for 457 visa holders here:

Home loans for 457 visa holders

Chinese mortgage brokers

Do you want to compare your finance options and need Chinese language support? Contact one of our Chinese mortgage brokers!

Chinese mortgage broker

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Australian property price gains remain strong – Aug 2015

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Australian property capital gains remain strong in Sydney and Melbourne – Aug 2015

Despite bubble talk from some media commentators the property price gains remain strong in Sydney and more so Melbourne – Aug 2015. If you were waiting for housing prices to drop in Sydney or Melbourne the latest data shows that it looks like you may have made the wrong decision. Demand for property in Australia’s largest and future largest cities remains strong. House price data from Corelogic PRData  monthly values – 31 July 2015 shows that “% Change Month on Month” unit prices were up by 3.23% in Sydney and up by 3.18% in Melbourne. Furthermore, house prices were up 3.32% in Sydney and up 5.12% in Melbourne, month on month. Rather than being dampened, surprisingly the data shows that property price gains in Sydney and more so Melbourne appear to be gaining speed. Melbourne price growth looks to be starting to catch up with Sydney’s.
Auction clearance rates over the last week (25 Jul – 1 Aug 2015) in Australia’s two largest cities show a similar picture with both Sydney and Melbourne having clearance rates at 79% according to the APM Market Reports on Real Estate listing site domain.com.au.

What about the changes some banks have made reducing maximum loan to value ratios for investors?

The changes in bank lending for investors does not appear to have had a dampening impact on property prices. There are still lenders that are providing 95% LVR investment loans and competitive interest rate, fees and feature packages. Furthermore, if you have equity from the already owned property price gains then you probably don’t need a higher LVR.

What about the interest rate rises for investors that some banks have made?

So far the interest rate rises that have been made by some banks have been modest. Investors must find the increase in interest rate insignificant compared to the capital gains that are being seen in Sydney and Melbourne. I wonder how much interest rates need to rise by before the current rate of capital gains becomes unattractive? Furthermore, there are still lenders out there that are under the Government Banking Regulator’s (the Australian Prudential Regulatory Authority – APRA) ‘magic number’ of 10% maximum allowed growth in investment lending and are more than happy to lend to investors. Investors can still get interest only investment loans in the low four percent range and even when borrowing over $1million. Note, you will need to meet the lender’s eligibility criteria. This information is correct at time of writing, the market is in a constant state of change. Check with us if in doubt.

What is the major limitation on borrowing now?

As previously mentioned the big losers from the new bank measures are first home buyers that want to enter the property market by buying an investment property. If you are a First home buyer looking to enter the property market as an investor to take advantage of the rent and negative gearing to help with the payments you may be interest in a guarantor home loan.
If you already own well located property in Sydney or Melbourne that was purchased some time ago you probably have access to some equity in your property. This equity can be used for a deposit on an investment property.
The major limitation on borrowing is then your borrowing capacity. The Government Regulator crackdown also included getting some banks to tighten up their borrowing capacity calculators and policy to make it more difficult to demonstrate your ability to make repayments if interest rates rise. The some banks have now changed how they consider rental income, living allowance and other some aspects in considering your ability to repay a loan. Want to maximise your borrowing power? Ask you what you can do and how you can do it, when you enquire with one of our mortgage brokers for a mortgage.

What is the solution for investors looking to borrow?

Looking to borrow to invest in the Sydney, Melbourne or other property markets? Ask one of our mortgage brokers about getting an investment loan with flexible borrowing capacity requirements, access to higher LVRs and competitive interest rate, fee and feature package. Note: this information is correct at time of writing, the market is in a constant state of change. Check with us if in doubt.
Contact one of our local mortgage brokers to go through your options.
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Home construction loans: how do construction loans work

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Construction loans

Building your dream home can be an exciting experience. Taking an idea and turning it into reality can be a rewarding experience if done right. When you build your own home you can decide how you want it to be.
It is not always trouble free. Constructing a home can be a long and expensive process and there are many possibilities that things can go wrong.
If you are borrowing money for the construction of the home then the lender is also taking on the risk that something will go wrong. The major risk is what the finish building will be worth. Some of the other risks include the quality of the builder. If the builder does not finish the building it can be very difficult to sell an unfinished home without providing a significant discount on the price. Even if the builder does finish the home, if the quality of the finished home is poor then the value may be less than expected.
Lenders don’t like taking on a lot of risk and will put in measures / requirement to reduce this risk. In the case of lending to build a home some lenders offer home construction loans, with all their strict criteria, specifically for this purpose.
Typically, a qualified and licenced builder must be engaged. Furthermore, the lender will want you to have a fixed price contract (not a cost plus) with the builder so the lender knows exactly how much it will cost to finish the building. Owner builder construction loans are available but generally only for builders who are building their own property. This means that you may have an especially hard time finding an institution to finance your project if you are intending to be an owner builder.
Having a fixed price with a licenced builder is only one of the many requirements of getting a construction loan.
Did you know that some lenders will allow you to use a construction loan for a three or even four units/townhouses development? If you are undertaking a small development contact us to go through your options.

Find out more about construction loans

Find out about the requirements and process of getting and using a construction loan. Everything you need to know.

Construction loans

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