Westpac Exits SMSF Property Lending
(19 July 2018 - Australia) Four banks have announced their withdrawal from the Self-Managed Superfund (SMSF) lending sector, with a further two banks announcing loans will no longer be offered to SMSFs.
Westpac announced it would no longer offer property loans to SMSFs for both residential and commercial properties that effective 31 July 2018 following an announcement from subsidiary St. George that it will also withdraw its SMSF loan products effective 31 July 2018. The removal of SMSF loans for both residential and business properties will be applied across all of the entities in the Westpac Group, including Bank of Melbourne and BankSA. The borrowing market has been impact adversely by tightening regulations for SMSF trustees for several months, especially loan to value ratios.
Off-the-plan purchases are becoming increasingly difficult to finance with banks either refusing applications for properties that are less than six months old or requiring stronger assets than normal to back their loans. Minimum cap requirements for SMSF have also been suggested, ranging as high as A$1 million as the relative performance of SMSFs declines markedly the lower the value of the starting balance according to official industry data.
“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 bank continually reviews its products to ensure we meet the expectations and requirements of customers”.
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