(Australian Associated Press)
Mortgage brokers are reporting increased interest in investor mortgages as buyers rush to get on board before possible changes to negative gearing after the federal election.
The head of the brokers’ industry body says minds have been focused by Labor opposition proposals to limit negative gearing to investment in new properties should it win the election on July 2.
However, those with an existing investment property would still be able to claim tax concessions until they sell, effectively setting a deadline for investors.
“People are having a bit of a run at it because, with any change in government, those provisions start from the middle of 2017 and anyone who’s in gets grandfathered,” Finance Brokers Association of Australia chief executive Peter White said.
“It has different impacts for selling later on but it’s not slowing down.”
Investors received a boost on May 16 when Westpac told brokers it was relaxing its restrictions on investor loans, dropping its deposit requirement from 20 per cent to the 10 per cent demanded by its major banking rivals.
“It’s Westpac getting into line with everyone else,” Mr White said.
“There was a lot of banking knee jerk reaction compared to the reality of what they may have needed to do.”
While Westpac’s loan-to-valuation ratio (LVR) for investor loans is now at 90 per cent, it’s still below the 95 per cent it was at before last year’s industry-wide clampdown on investor lending.
Mr White shrugged off concerns that house prices are in a bubble that could be further inflated by Westpac’s move.
“It would be very different if you were in a heated marketplace and you think the market’s going to pare back 20-30 per cent because it’s gone way beyond what it should be priced at,” Mr White said.
“The market’s certainly not overheated in my mind and I think it could easily tolerate that 10 per cent equity position on a 90 per cent lend in an investor market.”