Raising interest rates for existing property investors is opportunistic and unfair according to the Property Investment Professionals of Australia.
Banks have been making the moves to tighten up lending mainly in response to crackdowns from the Australian Prudential Regulation Authority to rein in risky lending in the ongoing climate of low interest rates.
PIPA claims slugging existing investment borrowers could have harmful consequences and is urging regulators and the Government to take a more balanced approach to creating a sustainable property market.
Ben Kingsley is the chairman at PIPA and says regulators should adopt a more targeted approach if they want to rein in investor lending instead of just using a blunt, blanket approach.
“Increasing borrowing costs for investors, and in some cases owner occupiers, who bought into the market some time ago seems unfair and detracts from what should be the common goal of creating a balanced property market,” Mr Kingsley told Brokernews.com.
Restricting borrowing power for new investors in overheated property locations is one way Mr Kingsley suggests this could be achieved.
“Above all, the industry needs to be united in slowing investor activity in some markets. While PIPA fully supports responsible lending, we believe going forward APRA should take a more transparent approach, rather than continue its current closed door tactics.”
“PIPA is urging the government and regulators to join forces and open this debate to the broader industry. Let us all contribute to this discussion and invest in measures that will create a more balanced property market for the long-term, and strengthen this invaluable component of our economy,” Mr Kingsley said.
PIPA is pushing for improved education surrounding property investment and a more regulated property investment advice industry.
“While real estate can absolutely be a powerful investment class, people must recognise that not every property in every market will deliver appropriate returns, and in a heated market, the odds are really against you,” Kingsley told Brokernews.com.
“PIPA remains dedicated to supporting a healthy, sustainable property investment industry, where education and appropriate regulation come together to support good outcomes for all stakeholders involved.”