Banks crack down on trust lending: What does it mean for your portfolio?

In this episode of The Smart Property Investment Show, host Phil Tarrant is joined by Eva Loisance from Finni Mortgages to discuss the recent tightening of trust-based lending and its impact on property investors.

They explore how major banks, including Macquarie, Westpac, Commonwealth Bank of Australia (CBA), and Australia and New Zealand Banking Group (ANZ), have introduced stricter rules for trust loans, including reduced loan-to-value ratios, proof of established banking relationships, and redirecting trust lending to private banking divisions.

Loisance explains how these changes affect investors using multiple trusts to acquire properties simultaneously and the potential risks of overextending.

The discussion highlights that non-bank lenders continue to offer trust-based loans, often with more flexible terms but higher interest rates.

The duo stresses the importance of working closely with mortgage brokers and financial advisors to navigate the new lending landscape.

According to Tarrant and Loisance, these tighter criteria reflect broader industry self-regulation and pre-emptive measures ahead of potential Australian Prudential Regulation Authority (APRA) intervention.

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