Macquarie bank has announced that it will halt its "bank of mum and dad" financing and borrowing for self-managed super fund (SMSF) investment property starting April 30. On Monday, the bank also stopped offering family loan guarantees.
"We are streamlining our core Macquarie loan offering," the bank said in a memo to mortgage brokers.
Macquarie will still service existing clients who hold these products, but those with applications will need to complete them by June 30, according to a report by The Australian Financial Review.
Many lenders are assessing their mortgage offerings amid increased funding costs, declining demand, growing negative equity, and rising risk from softening residential markets.
AMP and Commonwealth Bank of Australia both ended their SMSF lending last year as regulatory concerns climbed and property values dwindled.
Macquarie, meanwhile, offered up to 70% of the value of the property to a maximum of $1 million.
"Bank of mum and dad" is a term used to refer to parents guaranteeing loans and lending funds to their children to be able to buy properties. Nowadays, thanks to high prices, static wages and other factors, younger properties buyers are becoming more dependent on parents’ assistance to purchase a property.
Macquarie allowed family members, such as parents, to use the equity in the family home as security for their children's loan.
“The bank typically offered a basic home loan of up to $750,000 for an owner-occupier or investment loan. Any debt on the guarantor's property had to [be] refinanced across to Macquarie,” said The Australian Financial Review.
Macquarie also stopped underwriting new home-branded wholesale loans.
