Adelaide Bank is the next in line to announce a rate rise and reduction of their Lending Value Ratio (LVR) for new investment loan applications received after close of business today.
Their communication states “You will be well aware of the regulatory framework in place to moderate the growth of investment lending in Australia. As lenders adjust settings in response, it is necessary for us to make our own adjustments and ensure we remain in control of our growth to stay within the regulators 10% speed limit.” as the basis for both the rate rise and LVR reduction.
Adelaide Bank is not the first to make changes to their investment lending policy, over the last 6 months a range of lenders have quoted the Australian Prudential Regulation Authorities (APRA) 10% investment lending cap as being the reason for tightening their investment lending policy.
The lowering of LVR’s for investment applications is not a new tactic, with AMP announcing they will only accept investment purchase applications (no refinances) up to a maximum 70% LVR from 16th February this year and CBA also announcing they will no longer accept investment loan refinance applications.
Adelaide Bank will also raise their new and existing investor loan rates by 25bp, effective Friday 7th April 2017, but unlike the majors they are not raising their owner occupied rates.
It is only a matter of time before we start to see some serious specials on owner occupied loans as lenders battle with their investment lending growth and continue to attract APRA’s attention.