AMP Bank recently announced that is putting a stop to its self-managed super fund (SMSF) property lending amid a weakening market.
The bank took after the major banks, namely Commonwealth Bank of Australia (CBA) and Westpac, which had a similar decision over the past weeks.
While AMP is set to continue supporting existing SMSF home loan customers, shifting to interest-only, internally refinancing or extending loan term will not be allowed anymore starting this November.
As it was publicly reported, Westpac ended SMSF home loans for new customers last July 31. CBA, on the other hand, disclosed that its stoppage would begin on October 12 this year. It is important to note, though, that like AMP, both Westpac and CBA will continue to support existing SMSF loan customers.
Commenting on this significant development in the finance sector, RateCity Research Director Sally Tindall underscored that AMP’s announcement was not surprising.
“AMP’s new chairman, David Murray, has been one of the most vocal critics of self-managed super fund property lending,” she added.
Further, it was noted that these retreats from SMSF lending reflect the efforts of banks to minimise the risk in their loan books.
At present, Macquarie Bank, Bendigo Bank and Bank of Queensland are the biggest banks that offer SMSF property loans among providers.
Four years ago, the Financial System Inquiry already suggested to the government to “remove the exception to the general prohibition on direct borrowing for limited recourse borrowing arrangements by superannuation funds.” However, Scott Morrison, who was then treasurer, disregarded the idea.
