Australia’s property investors are facing some unexpected hurdles as big banks tighten their lending practices. New rules from the Australian Prudential Regulation Authority (APRA) are now in place, and the impact is already being felt across the country. With lending caps on high debt-to-income (DTI) ratios, many landlords who have multiple properties are finding it harder to get financing. If you’re a property investor, this could be the wake-up call you didn\u2019t know you needed.<\/p>\n\n\n\n
Since February 1, APRA\u2019s restrictions have limited the ability of banks to lend to property investors with a DTI ratio higher than 6. Essentially, if your total debts exceed six times your annual income, you\u2019re now automatically excluded from borrowing more money \u2014 no exceptions. For example, a household earning $100,000 a year can only take on $600,000 in debt under the new rules, reports Yahoo Finance<\/a>.<\/p>\n\n\n\n According to Alex Veljancevski, a mortgage broker and founder of Eventus Financial, these rules are already causing headaches for many investors. He has noticed that even investors who passed serviceability tests\u2014 meaning they could afford the loan \u2014 are now being rejected due to their high DTI. What was previously a simple loan approval process for some investors is now facing a brick wall. In short: if your DTI is too high, even strong serviceability can\u2019t save you.<\/p>\n\n\n\n