What does APRA's latest mean for Melbourne buyers?


Been thinking about adding another slice of Melbourne real estate to your portfolio? Well, now may be the time.

That’s because after four years, the Australian Prudential Regulation Authority (APRA) has announced they’re prepared to lift the 10 per cent cap on investor loan growth. What does this news mean for Melbourne buyers?

Why APRA is doing away with their lending speed limit

The idea of lifting the cap has been tossed around for some time, but last month, APRA wrote to authorised deposit-taking institutions (ADIs) to notify them they’ll remove the cap for lenders who can show they’ve strengthened their lending practices and policies.

“The temporary benchmark on investor loan growth has served its purpose,” explains APRA Chairman Wayne Byres. “Lending growth has moderated, standards have been lifted and oversight has improved.”

When the benchmark was first introduced, APRA was highly concerned with fraud, bribery and oversight among lending institutions, particularly the big four. While they’re willing to lift the 10 per cent cap, APRA has been clear the 30 per cent benchmark on interest-only loans will remain and that they’ll continue to keep a watchful eye on certain ADIs moving forward.

What does this mean for Melbourne investors?

From July 2018, authorised ADIs will no longer be required to operate below the 10 per cent lending cap, and many believe this will lead to greater competition in the mortgage sector. With new options on the market, new investors and smaller players could be better positioned to compete.

Others, however, aren’t as optimistic. Some analyists don’t believe investors will see much of a difference as the majority of banks were already operating below the 10 per cent cap before APRA’s rule was enforced.

What the long range effects of the regulation will be remains to be seen, but what’s certain is that Melbourne property values are still on the rise.

The Real Estate Institute of Victoria (REIV) has identified Kew and Northcote as the top performing growth suburbs by median house price:

Suburb Mar-18 Median Dec-17 Median Quarterly change
Kew $2,710,000 $2,135,000 26.90 per cent
Northcote $1,610,000 $1,350,000 19.30 per cent

Situated within the Nelson Alexander umbrella, these are just two of the northern suburbs on the rise.

To find the right property for you, contact our team today. Backed by more than 25 years servicing the northern suburbs, the agents are Nelson Alexander are here to help.

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