“As we enter the new year, it doesn't look like things are going to get easier in the qualification for investment home loans – in fact, it looks like it is going to get a whole lot harder,” Andrew Harrison of KeyInvest Lending Services told The Adviser.
“The latest consultation paper from the Basel Committee proposes higher capital requirements specifically on investment loans and predicted rate rises.
“Behind the scenes there is no doubt we will see a further sharpening of policy surrounding the qualification criteria for investment loans,” he said. “This could be in the form of these types of loans requiring a higher deposit or instead of allowing 80 per cent of rental income towards serviceability, a lower threshold could be set."
He added: “Even worse, both of these types of changes could be implemented simultaneously, which would preclude a large proportion of Australians from beginning or expanding their property investments.”
Despite the regulatory changes of 2015, which saw banks introduce two-tiered pricing and lift their variable rates to offset additional capital requirements, Mr Harrison said investors should buy now to avoid facing further lending curbs.
“It would be prudent if you wish to purchase an investment property in 2016 and you think you may struggle to meet a higher deposit and/or you would rely upon the rental income to service your investment loan that sooner rather than later would be a good time to buy that investment property,” he said.
Mr Harrison, who is based in South Australia, was named the winner of last year’s inaugural Investors Choice Award for mortgage broking. More than 80 per cent of the loans he negotiates are mortgages for property investment.
Last year he told The Adviser that APRA's regulatory pressure to curb investor lending had actually boosted his business.
“The organic growth of my business has been incredible since the changes began in May [...] I positioned myself to take on the changes in investor lending and APRA intervention as a positive opportunity to bring my skills to market,” he said.
Savvy property investors with large portfolios are now seeking Mr Harrison out as a strategist and specialist in investor loans at a time when other loan writers are battling to keep up with an increasingly complex market.
“The demand for my advice and services has increased and this is happening through my clients talking about their experiences with their work colleagues, friends and families,” he said.
Mr Harrison has been in the industry for 30 years and says three decades of experiencing the ups and downs of the economy have led him to roll with the punches and embrace change.
“The one constant in my career has been change, and the only thing that is guaranteed in future is that there will always be change, so why not embrace it?”
[Related: Brokers to see investor clients return]