AMP stops new mortgages for investors with sizeable property portfolio

AMP is axing new mortgages to property investors with five or more properties.

It continues the lender crackdown on borrowers with multiple dwellings.

The Australian Financial Review reports AMP is also tightening scrutiny of all loan applications and banning new loans to investors whose property related income, which is typically rent, is more than half of their total declared income.

AMP is also decreasing the maximum amount of verified gross rental income it will accept for loan-servicing purposes from 80 to 70 per cent for properties in higher risk zones, such as inner city high-rise apartments.

The number of households with an investment property grew at the height of the property boom, especially in 2014-15-16, according to analysis by the Australian Taxation Office, although the numbers with a big portfolio does remain comparatively limited. 

Investors with big portfolios increased by about four per cent to about 45,000 with four properties and 20,000 with six properties in the most recent data.

It kicked off in the 2014-15 financial year the number of investors with five or more properties grew by 7.5 per cent – almost double the rate of growth over the previous nine years.

Of the 11 per cent of the adult population with investment properties in Australia, more than half of those are now owners of two or more properties, according to data included the RBA’s Financial Stability Review.

One in 10 investors own three or more properties, the central bank said, based on analysis of Australian Taxation Office data.

Professionals such as teachers, lawyers and accountants are the biggest group of investors by professional grouping – these groups account for 22 per cent of property investors in 2014-15.

Managers and professionals together – the two highest-paid groups – account for 37 per cent of all investors in property and have close to the highest level of negative gearing.

The most highly negatively geared group of workers is machinery drivers and operators – they account for just 3 per cent of property investors but 74 per cent of them are negatively geared.

The data showed a marked increase in the age of property investors, with the number of over-60s in the market almost doubling in the 10 years since 2005 to now account for about 22 per cent of all investors.

Property portfolios valued at $2 million in popular Sydney and Melbourne suburbs are generating weekly returns of less than $752 after deduction of expenses, according to recent analysis by chartered accountant and adviser William Buck.