Westpac has announced this week they will be withdrawing new loan offers to self managed superannuation funds looking to invest in property. The bank, the nation second-largest mortgage lender, and its subsidiaries Bank of Melbourne, St George Bank and BankSA, will withdraw from lending to small super funds at the end of July, to “simplify and streamline” its products.
The move has shocked some mortgage brokers and financial advisers, who act as intermediaries between borrowers and the banks, but complements a change in lending strategy the banks have rolled out in recent weeks.
While the change in policy has been primarily driven by broad concerns in the residential sector, we anticipate the impact on the commercial market in our region will be more specific and immediate. The SMSF buyer pool has been driving the sub-$1m investor market for tenanted properties and has been a key source of buyers for small “man-shed” style product, where business owners buy in their super fund and lease back to their business.
The result of this will likely be a slight softening of yields in the strata investment market and a shift in the lease:buy ratio of demand in the direction of leasing.