CBA joins Macquarie in curbing trust lending as ‘animal spirits’ run wild in property investing
Two of Australia’s largest financial institutions, Commonwealth Bank and Macquarie Group, have pulled back from lending to property investors using trusts and company structures to amplify their borrowing power, as concerns mount over “unsustainable” behaviour and “animal spirits” in the housing market.
As the prudential regulator APRA signals growing unease about high-risk segments of the market and ponders ‘macro-prudential’ lending restrictions, the nation’s largest mortgage lender CBA on Friday told mortgage brokers it would tighten restrictions on lending to trusts and companies.
CBA’s decision followed an earlier move by market disruptor Macquarie Group, revealed by Capital Brief earlier this month, to stop lending to investors using trusts or companies altogether.
Lending to trusts has become a hot button issue in the mortgage industry after videos proliferated on TikTok and other social media platforms instructing Australians on how to take out “unlimited loans”.
The method, espoused by some buyer’s agents, recommends borrowers create trust and company structures to obscure their leverage and increase their borrowing capacity. Macquarie identified the surging number of videos on TikTok about this as a key factor in deciding to get out of the borrower segment.
