24 Jul More lenders exit on SMSF loan offering
In just a year after announcing that they will tighten the loan requirements, Westpac announced that effective 31 July 2018, it would no longer offer property loan to SMSFs for both residential and commercial properties.
Also, Westpac’s subsidiary, St. George announced that it will withdraw its SMSF loan products from sale that will take effect on 31 July 2018.
Confirming to Mortgage Business, SMSF Adviser’s sister title, Westpac Group said that the removal of SMSF loans for both residential and business properties will be applied in all of the brands in the Westpac Group, including Bank of Melbourne and BankSA.
Westpac confirmed it will continue to service its customers with existing SMSF loans as allowable under the credit policy including split loans, switching loan products and extending loan maturity. The bank said it will no longer permit switching from principal & interest to interest only and extending an interest only term.
Westpac is set to rock the increasingly nervous property market by withdrawing new loan offers to self-managed superannuation funds looking to invest in property.
The move has shocked mortgage brokers and financial advisers, who act as intermediaries between borrowers and the banks, but complements a change in lending strategy the banks have rolled out in recent weeks.
Westpac stated that the bank continues to review its products to ensure it meets the expectations and requirements of their customers”.
“To streamline our product offering, effective Tuesday 31 July 2018 applications for new Consumer or Business Lending will no longer be accepted for SMSFs,” Westpac stated in a public release.
The borrowing market has been getting tougher for SMSF trustees for several months, especially with loan to value expectations, as foreshadowed by specialist brokers like Thrive Investment Finance’s owner Samantha Bright last year.
Off-the-plan purchases are becoming increasingly difficult to finance, with lenders either refusing applications for properties that are less than six months old or requiring stronger assets than normal to back their loan according to Ms. Bright.
Aside from Westpac, four separate lenders have announced their exit from the SMSF lending space.
Commonwealth Bank is now the last major institution lending to SMSF following Westpac’s exit
Reference:
https://www.accountantsdaily.com.au/smsf/11909-smsf-clients-take-a-hit-as-more-lenders-exit
Sorry, the comment form is closed at this time.