Dec 04 2018Add to Favorites
Home loan approvals have fallen significantly off the back of the APRA and the Royal Commission initiatives together with new Responsible Lending Criteria. The ABS recently reported that home loan approvals have fallen by 13.6% year on year and within that, investment loans have come back by c.20%.
One of the major contributors to the drop-in mortgage approvals has been the policy changes that all APRA regulated banks have implemented. Prior to the changes, most lenders would assess a new loan with an interest rate buffer of 7.5%, but any loans a potential borrower had with other lenders would be assessed based on what the actual repayments were.
The recent implementation of the new responsible lending criteria means that all loans a borrower has are assessed at 7.5%. And for an investor with for example, four investment properties, borrowing capacity is dramatically reduced.
“The Balmain Sub-Trust syndicated loan investments offer low gearing combined with the senior security is attractive to investors”, says Tom Sherston, Head of Sales at Balmain Private. “The investment horizons are also relatively short with loan terms ranging from c. 6 to 24 months which is seen by investors as an attractive savings tool when waiting for a home deposit to accumulate”.
“We also see a lot of investment activity via the Balmain Private platform from people in the property industry.”
Investment returns range from c.6.5% to 8.5% per annum net, paid monthly and investors can open an account with $50,000 and can invest in individual loan investments in increments of $10,000 via the online platform.
Qualitas' first "pure property debt" listed investment trust, the Qualitas Real Estate Income has raised another $35 million in funds to issue more commercial loans.
Commercial property isn’t a pure income asset class like cash or fixed interest but it has a few advantages over other forms of income-based investing, starting with the yield. Right now, the APN AREIT Fund, for example, offers a distribution yield of 6.08%, paid monthly.
The Centennial Industrial and Logistics (CIL) launches its latest Enhanced Value fund will follow on from the success of the CIL I and CIL II funds which currently own 6 industrial and logistics properties across Brisbane and Melbourne totalling around $90 million in value.
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