Actually it’s all a bit if a nonsense. Banks have been frequently charging commercial rates on investment loans for many years past, so this proposal only confirms what has been standard practice by most lenders for a long time.
It will end up in rent increases eventually as all additional costs on any business get passed on in prices. It is only a matter of time.
Home-loan changes postponed
The Reserve Bank has delayed the introduction of more home-loan rules for rental properties, but has not bowed to pressure to tone them down or scrap them.
A little-known set of new restrictions was meant to come into force yesterday as part of a review of banks’ capital requirements.
However, the central bank has decided to put off some of the changes until December after opposition from banks and investors.
Under the new rules, landlords with mortgages on five or more properties will be classed as small businesses or corporate borrowers.
That will place them under closer scrutiny as well as force banks to set aside more money to cover the higher “risk weighting” on business loans. Both factors are expected to lead to significantly higher interest rates and premiums for landlords.