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 proposals to limit negative gearing to investment in new properties should it win the July 2 election.
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 says.
Investors received a boost on 16 May when Westpac told brokers it was relaxing its restrictions on investor loans, dropping its deposit requirement from 20% to the 10% required by its major banking rivals.
“It’s Westpac getting into line with everyone else,” White says. “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%, it’s still below the 95% it was at before last year’s industry-wide clampdown on investor lending.