Another Lender withdraws from the SMSF Lending Space
In response to a number of external factors, the Rock announced will no longer be accepting new applications for Self-Managed Super Fund (SMSF) loan products from 30th June, 2015.
This action is on top of moves by 2 major banks that have recently stopped lending for residential properties purchased in a Self-Managed Super Fund.
NAB is now the second major bank to shun SMSF property loans.
These decisions occurred before the recent interest rate drop, but came as concerns continue to mount in the media that Australia’s record-low cash rate is fueling an already overheated property market.
In an interesting twist ANZ Bank recently backed the Financial System Inquiry’s recommendation to ban SMSF lending, after committing to not include Self-Managed Super Fund loans in its mortgage strategy. This is not surprising because ANZ have never been competitive in this market and this commitment will have no major impact on their loan book.
Specific concerns have been raised by the Financial regulators (APRA/ASIC) about SMSF lending, as well as the general levels of residential investment borrowing within the industry. The Federal Government has also been providing commentary about the future of Limited Recourse Borrowing Arrangements (LRBA’s) and borrowing by SMSFs more broadly.
If you already have a loan for you SMSF with one of these banks, nothing will change and the banks will continue to support the loan.
If you’re looking to buy property in your SMSF, don’t worry – there are many other banks out there such as Westpac and St George willing to lend for this strategy.
Generally the banks will lend on a LVR (Loan to Asset Value) of 80% for residential property and 65% for commercial property. Standard investment interest rates generally apply with no honeymoon periods.
The SMSF should have a corporate trustee and an investment trust is established to hold the debt prior to any offer and acceptance being signed. If this sequence is not followed the possibility of double stamp duty is a likely outcome.
If you are considering borrowing to buy property in your SMSF you must seek professional advice first. Our sister company, Accurate Investments, trading as Rapattoni Accountants, can assist with this advice.