Summary Of Australian Lending Changes July 2015 (Ep301)
In July 2015 there were major lending changes in Australia which mainly impacted property investors (as opposed to home owners). We discuss these changes and how they may affect you.
Hey, guys. Ryan here from OnProperty.com.au, helping you find positive cash flow property. There’s been some major changes in lending in Australia this month of July, 2015. Across the board, for investors, it’s becoming harder to get lending now due to these new guidelines that have been put in place by APRA.
And so, I’ve got Ben Everingham with me from Pumped On Property. He’s a buyer’s agent and we’re going to be talking through these changes and giving you guys a summary in layman’s terms so you can understand exactly what’s going on and how it’s going to affect you.
Ryan: Hey, Ben. Thanks for coming on today.
Ben: Good day, guys. Sorry to be the bearer of not-so-good news today.
Ryan: [inaudible 00:37] out there. I’m not a mortgage broker or financial adviser so none of this should be considered mortgage or financial advise. This is for educational purposes only.
So, Ben, why don’t you give us a quick rundown of what the hell happened, man?
Ben: Just want to put the same disclaimer in. Obviously, I’m just noticing what’s happening to my investors and I’m definitely not an advisor. [inaudible 1:01] I’m also noticing what’s happening with my investment properties as well. So, basically, probably 9 weeks ago now, there started to be a bit of buzz from APRA, which is a government body who – Ryan just put it really well – kind of like the UN of the Australian property investment lending market and they got together and they said that because of how hot the market is right now in places like Sydney and Melbourne, and because we’ve got an all-time high for investment lending, they’ve come in and started to tighten up a few things. Basically, 10 weeks ago, it was very easy for investors to get money and today, it’s still easy if you know the right people but it’s definitely tightening up from where it was.
Ryan: Okay. Just so people know, APRA stands for the Australian Prudential Regulation Authority. What Ben was telling me was basically they provide the guidelines to the banks as to how they should regulate their lending and what sort of guidelines they should use when they’re working out how much to lend. We’re talking about loan-to-value ratios; we’re talking about interest rates and stuff like that. I think they don’t provide law to the banks and say, “You have to do this.” but they’re kind of an industry body that says, “We think that the whole industry should abide by these rules to make sure we don’t have –”
Are they trying to avoid a major crash? Or what’s the goal?
Ben: That’s exactly where the people that I’ve been speaking to in the mortgage brokers in my network and the guys that I’ve been reading are sort of saying where it’s going. If unregulated, these guys continue to loan to investors, because investors in Australia are the last period of roughly 6 months have represented over 50% of property buyers in Australia, which is completely unprecedented. So, they’re just putting the brakes on and trying to slow down the market a little bit.
Ryan: What’s it been previously? Like with percentage of homeowners purchasing properties versus investors? Like, you say 50-50 is unprecedented, what is it usually?
Ben: It really depends on sources, but a good level of investment lending would be between sort of 10% and 25% as an industry standard.
Ryan: Okay. So that’s a big difference.
Ben: Significantly more loan being written to investors.
Ryan: Okay. So, what exactly did APRA say to the banks that they should be doing? And how does that affect homeowners and how does it affect investors?
Ben: Again, based on the conversations that I’ve had with people inside my network, there’s basically 5 major changes that have been, as you said, not put into law but just guidelines for the banks to begin following.
The first major change is the reduction in maximum loan-to-value ratios. Over the last 3 to 4 years, people like myself and a lot of other investors have been able to access relatively cheap money at very cheap rates or very cheap LVR. It wasn’t uncommon before the last 12 weeks for investors to be getting 95% loans. Or if they had good equity in another property or good cash, 100% loans or 105% loans. So, their stamp duty plus their lenders insurance and all of that cost are being covered by the banks as well.
Ryan: Is this for investors who already own property and withdrawing on equity in order to invest or is this for new investors? Because I’ve never seen 105% loans be applicable to people who are trying to get into the market.
Ben: Okay. Sorry, yeah. So, just to clarify what Ryan just said. Great point. 105% loans only exist for people with existing property and really good equity in those properties. It’s definitely not for those people that are buying their first property, by any means.
By accessing 105%, if owned a property in Sydney worth $400,000, it’s now at $600,000. Traditionally, you could pull out 80% up to 95% of that $200,000 in equity and use that as your cash down in your next investment property.
Ryan: Yeah. So you could take the loan-to-value ratio of your first property, you could push it all the way up to 95%, so you access the most amount of money possible and you could then take that equity to use as your deposit for your next property and get lending on that as well.
So that’s what used to happen. So now, are you saying that you can’t borrow up to 95% on equity. Have they squashed that down?
Ben: I would say, just to add something to that as well, it’s never sensible to borrow up to 95% of the exact equity in an existing property. It puts you in a really vulnerable state. Most investors would borrow up to about 80%. But for that new loan, people were borrowing, as I said, up to 95% of that loan. So, using the equity as cash to put 5% deposit down plus closing cost paid for by the equity like cash in that new loan.
Ryan: Okay. So, let’s say there’s someone who owns 1 investment property and they’re looking to buy a second investment property. In the past, what they would do, they had equity in the first one, they would draw upon that equity, pushing the loan-to-value ratio up to 80% for that to get 5% deposit for the second property plus your closing cost. And they would then borrow another 95% for that second property.
So, that’s what used to happen. So what’s the go now? Are we limited on the equity we draw from the properties we already own or are we limited on the loan-to-value ratio and how much we can borrow for the new investment properties we’re buying?
Ben: So, that’s kind of like exactly a great question. It’s almost a double-edged sword at the moment. You can pull less money from your existing equity and you also need to put more money down on a new deposit.
When I say that they’re making reductions in the maximum loan-to-value ratio, instead of 100% and 95% loans, there’s only a couple of major lenders in the marketplace now doing 90% loans. And a couple of the major lenders have also said that they’re either moving towards 80% loan-to-value ratios; meaning you need 20% of the cost of the property to actually purchase it. And that’s a scary thing because there’s not a huge amount of people in the marketplace that have a spare 20% of $600,000 sitting around as cash or a valuable equity.
Ryan: Yeah. Have you got a lazy $120,000 that I can use to invest in a property?
Okay. So, there’ll be a lot of people listening to this that are absolutely freaking out right now. I know that when I first heard about this, me and my wife were planning to buy our house, like our first property, next year – at the end of the financial year. And I was under the impression, “Okay. Well, maybe we can’t because we have only 5% to 10% deposit.”
Does this just affect investors who already own property or how does this affect homeowners? Because I’ve heard that it affects investors heavily but it actually, it kind of benefits homeowners or doesn’t affect them at all? Can we talk about that?
Ben: Yeah. I suppose there’s winners and losers with everything. And so, if somebody’s losing, obviously, somebody’s being propped up to win. So, the people that are most affected are the lowest income earners, obviously, I’m watching those guys always get the worst end of the stick; the middle income earners that own multiple properties.
Let’s say you’re on a combined household income of $100,000 per year. And you are in your own home and 1 investment property. It’s now harder to move into investment property 2 than it was, say, 12 weeks ago. Those with really high loan-to-value ratios – those people that were over-capitalised and were borrowing the 95% over the last couple of years – and anybody with more than 3 properties, I suppose, is going to be hit harder because of some of the other changes.
But then, on the flip side, there’s a lot of people that wins. So, as you said, first home buyers are almost unaffected by this, outside of potentially needing to come up with more deposits. But for first time owners, there are some banks that will still look at 90%-95% loans just for that segment of the market; here’s those people with huge amounts of equity and low debt on their portfolios, which are in a strong position; first time investors and home buyers. So, they really want to encourage home buyers to come back into the marketplace and that’s what this is all about.
Ryan: So, as a home buyer myself – or wanting to be a home buyer, obviously, you’re not a mortgage broker, so we can’t take this as advise but do you think that a home buyer would be able to purchase a property with a higher loan-to-value ratio than the 80% up to 90% or 95%?
Ben: Again, as you said, neither of us are mortgage brokers but what I’m seeing from clients is, those people without massive amounts of property-related debt are far more able, right now, to move back into the market quicker and they’re relatively unaffected.
Ryan: Okay. And then let’s talk about – because you were saying, just 2 days ago, that there was some changes with the 4 major banks and they hiked their interest rates. What happened there?
Ben: I think everybody woke up on Tuesday or Wednesday morning and a number of the major banks had increased interest rates for investment lending. For people that weren’t on fixed interest rates by about between 0.25% or a quarter of a percent and half a percent. And they also went back through everybody that has loans with their bank. Let me just rephrase that, sorry. Some of the major banks, some people that owe money to those banks on investment loans woke up with between a 0.25% and 0.4% increase on their interest rates.
I actually went into one of the major 4’s this morning just to double-check myself, nothing’s happened to my loan at the moment. So, I suppose, there’s a difference between what they’re setting in policy and sometimes what’s actually being actioned out and it’s probably just a matter of time before it rolls out.
Ryan: Okay. So, the banks have said that, “We are going to be increasing our interest rates on variable loans by 0.25% up to 0.4% or 0.5% on new loans as well as existing variable loans.” is that right?
Ben: Existing variable investor loans. So, if you go in your own home and they know that, that’s completely fine. It’s just that investor market that’s being targeted right now and people with new loans for an investment product. The great thing about it is the banks are looking at reducing for home buyers their loans by 0.25% to 0.4%. So, as I said, someone wins, someone loses.
Ryan: Yeah. So, this definitely sounds like all of the finance community is getting together to try and get investors out of the market – or not to get them out of the market but to slow investors getting in and to really push homeowners to get into the market.
Do you have any idea, why is that so important? That we have less investors and more home owners?
Ben: That’s a really good question. I don’t know enough about what’s happening right now to probably answer that in detail. But I know that 50% of people in the marketplace are investors. Investors are more speculative, they’re prepared to pay a premium to move into a marketplace, as we’ve seen in Sydney over the last 12 months. When investors are the ones driving activity, that’s more unstable, I suppose, as to homeowners who buy, add value to an area over time and it just progressively increases. Where, as you see with investors, it’s flat-spike-flat-spike-stop thing and that’s what they’re trying to take out of the market, that bubble that we’re talking about.
Ryan: Yeah. Well, I guess, when you’re a homeowner looking at purchasing a property, you really are considering, “what’s the cost of this house?”, “how is it going to affect my lifestyle?” and “is it worth living in this area?” and if it’s not, then you move out of the area and you go somewhere else. So, I guess, the supply and demand would, I guess, be more fluid and make more sense for a homeowner. Whereas, investors who’s just going after the money or they’re pushed because they feel like the market is going up and up and they need to get in and offer more. I can understand how that would spike in the market.
So, the recommendations that have been made, basically, they are affecting people who already own properties and who want to grow their portfolio or even if you own properties, you might see increases in your interest rate for your investment properties. So, it’s going to be harder to, I guess, grow your portfolio. It’s still possible, though, right?
Ben: 100%, still possible. It means that, I suppose, you need a team around you of people that can provide great advise. I know, Ryan, you’ve got a really high-quality mortgage broker in your network. I’ve also got one in mine. And it seems to be that it’s definitely not impossible, by any means, regardless where you are. You probably just need a strategist, as opposed to just your normal bank manager guiding you through some of this stuff. Only if you’re at that pointy end where you’re on the borderline of hitting a serviceability limit.
If you’ve got available cash and equity or you don’t own any property, you probably won’t have any problems. It’s just for those people that are close to some sort of servicing limit with the banks.
Ryan: Okay. So, it’s probably best, if people are looking to invest again, definitely go and see a mortgage broker. Because you really need to understand how this actually affects your situation. Because from what I can understand, it’s going to affect everyone differently, depending on whether you’re a first homeowner, depending on whether you’re an investor but then, as well, depending on how much equity you have, how many properties you own, what your income is, what the income from your properties is. There’s just so many different factors that, depending on your situation, are going to affect you.
Do you think this will stay the same for the foreseeable future? Or do we see more major changes coming?
Ben: Yeah. I think, from the people that I’ve been speaking to, there’s more changes coming. Because the changes that have been made at the moment are still not slowing the marketplace right now. It’s going to take a while for that effect to take place but I definitely see more changes coming. And it having some effect on the marketplace in terms of slowing down that investor-related lending.
Ryan: So, is it kind of like the market’s just moving so quickly, they’ve tried to put on the brakes but it’s just skidded and the market’s still going forward?
Ben: Again, unfortunately, what generally happens when interest rates begin to rise, everybody that hasn’t bought, that’s been thinking about it for the last 2 years, rushes into the marketplace to buy. And that’s generally because, as humans, we have a fear of loss and higher interest rates means that – I could have bought something yesterday at a low rate and now, today, I’m looking up here.
For some reason, we rush back in and, for some time, it’s going to continue to fill the marketplace until they get to a point where it’s sustainable or the news changes from positive to negative and people start, unfortunately, going down that [inaudible 16:23] again where they don’t think there’s money to be made in property and they’ll start putting into other asset classes again. Which is probably the better time to buy a property, to be really honest with you.
Ryan: Which is when the market’s going down, you can get good deals. It’s so hard to work this stuff out because it’s such major changes on a national level and they’re working with 20 million people or more and they’re trying to adjust this and there’s time lags between what they do. It’s hard for an average investor to say, “What is going on? How’s this going to affect me? Where should I invest?”
It sounds like the changes that have happened, they’re very unlikely to be reversed. If anything, they’re going to be pushed forward and it’s going to get even harder to get lending for investors.
Ben: Only in the short term, until the brakes do occur on the property market. And then, everything’s cycular. Again, at some point in the future, when the banks stop making a billion dollars a quarter in profit, they’re money-making machines, they’re going to want to go back and say, “Well, we’ve played by your rules for the last 6 to 12 months, the market’s slowed up. Let’s incrementally become easy to deal with again.”
It’s just a cycular thing. This isn’t the first time something like this has happened, by any means, and it definitely won’t be the last time, either.
Ryan: Do you know when this has happened in the past? Because I haven’t been in the market too long and been working with On Property and stuff that long that I’m aware of back in – when I was born – like 1988, we had 14% interest rates or something like that. Has it happened recently or –?
Ben: Not in my lifetime of investing or your lifetime of investing. I was speaking with my mortgage broker this morning and he actually said that at one point in the future when he was in the business, something similar happened where they tried to put brakes on investor-related lending and the bank managers were actually getting paid to go knock on doors to make sure that loans that they’ve just given to their customers were actually owner-occupier loans as opposed to investor loans. Because the thing about everything is that people always find a way to work within the system without breaking the rules but bending them. In the past, that’s what obviously happened. People are getting owner-occupier loans and using them as investment property.
Ryan: Yeah. I wonder what will happen. This is probably too complex a question and so feel free to pass on this one. But let’s say, you’re in a situation where you own your own home and multiple investment properties, could you turn your home into an investment property and then go to the bank and say, “I’m going to buy my own home.” again?
Ben: That’s a really good question and one that’s definitely beyond my level of comprehension, I’m sorry.
Ryan: I’m pretty sure they’ve probably plugged that loophole when they would look at your portfolio. It seems like a pretty easy loophole to plug. I know people are always trying to find the loopholes in the system. Like with self-managed super funds, people are always asking, “Can I buy my house in my self-managed super fund and then live in it and pay rent to myself?” But those loopholes that are obvious are generally pretty plugged. So, speak to your mortgage broker.
Have we missed anything?
Ben: I think, what I’d like to touch on, really, is I hope we haven’t scared anyone here because money is readily available and it’s still a great time to buy property and to go get money. I just want to help people understand the major changes that have occurred so that they understand how look at them when they walk in through the door.
So, as we said, firstly, the reduction in the maximum loan-to-value ratio; which means instead of giving you 95% 2 months ago, they might give you 90% today and in 2 months’ time, they might only give you 80% of the loan.
The second thing is they’ve increased the servicing rate. So, in the past, if I’ve got a interest rate on my own home of 4.5%, which is extremely common at the moment in Australia. You might go into the banks to get an investment loan and they would consider your home based on a 4.5% interest rate. What they’ve done now is added a 2% “sensitised” rate to your loans. So, on paper you’re paying 4.5% and nothing will change but the way that they look at you is like you’re paying an extra 2% or even up to 7.5% right now.
So, from that perspective, if you’re interest is almost doubled overnight, only in the bank’s eyes, it’s far harder for you to get money because your average monthly repayment has just gone from $1,600 in the bank’s eyes to $2,800. It’s not going to affect you at all but it is going to affect the way that you can borrow and get access to new money. Do you understand? Does that make sense?
Ryan: Yeah. So, basically, let me just rephrase it and see if I’ve got it. You’re going to a bank to try and get a loan. A hypothetical situation, obviously. Someone’s going to a bank to get a loan at 4.5%. And this person, the investor is saying, “Well, I’ve done my sums, I can afford 4.5%. It’s going to cost me X dollars per month.” But what happens in the bank’s backend internal systems, they are actually assessing you and saying, “Okay, well this investor is coming to us, can he afford this loan if interest rates were 2% higher than that. So, 6.5% or even at the guidelines now, which is what, 7.25%.” So they’ll actually say, “Okay, you’re buying a $300,000 house. You’re getting the interest rate of 4.5% but we’re actually assessing your ability to service this loan at 7.25% or 2% above whatever your paying.” So, you’re not paying more as an investor but because they’re assessing you at a much higher interest rate, you’re going to be able borrow less than you would if they just assessed you at the market rate.
Ben: Absolutely. One of the mortgage brokers that I spoke to recently put it really simply. Basically, for every $600,000 you want to borrow right now, you need to be earning an extra $5,000 per month of income. So, if you were in your own home that’s worth $300,000 and you don’t have any debt, then, if you’re earning $100,000 a year, you can pretty much – let’s just call it as a rule of thumb – be able to somewhere in the vicinity of up to $1,000,000, a bit over.
But if you already own 3 investment properties because you’ve bought them when you could get access to cheap money, all of a sudden, you’ve got $1.5 million worth of debt. But you’re only earning $100,000 a year. There’s no way in the world that when you go into the banks, they’re going to actually allow you to continue to move forward. And they’re the people that are struggling the most right now.
Ryan: Okay. From my understanding, these guidelines – didn’t APRA set limits on how many new loans or how many new investor loans that the banks could give? Which probably affected the major banks more. Are there smaller lenders who may not be as affected by these guidelines implementation and may still be able to give you access to higher loan-to-value ratios and stuff like that?
Ben: That’s a really awesome point. Because it’s mainly the majors that have been giving a huge amount of investor loans and they were the guys that were giving up to 95%. Where, historically, a lot of the smaller banks and financial institutions in Australia already had these rules in place. They haven’t had to change their business model at all. And so, those guys are the ones now where a lot of people, instead of going through top 4 are looking at those second tier lending firms and those guys are still giving out money like they were 3 months ago, it’s business as usual.
It’s just more the bigger guys where APRA’s come in and said, “You need to reduce over the next 12 months your investment lending by a minimum of 10%.” So, 1 out of every 10 people that come through the door aren’t going to get loans and they’re just going to make it harder for everybody else.
Ryan: Okay. That’s good to know. Because, again as we said from the outset, we’re not mortgage brokers or anything like that. We just kind of wanted to give a summary and an overview of how this may affect people. But if you are in the market and you’re looking to invest, don’t be scared by this. But go and speak to your mortgage broker because, as Ben said, there’s lenders out there whose situation hasn’t changed because they’re already following guidelines like this and you may be able to borrow money from them or there may be other options for you.
So don’t be completely scared and think that, “Oh my goodness, I can never invest again.” because that is not the case for most people. It’s the fact that the government or, I guess, APRA whoever they are, are trying to limit the market and just make sure that we don’t end up in a bubble that pops and crashes the whole economy or something like that.
I guess, I want to reiterate to people, don’t freak out. There’s still possibilities for you to expand your portfolio. And as Ben said, that’s the time that you really need to get good advisors and people who know the market, know the lending market and can really help you navigate that from a strategic standpoint, rather than just say, “Well, no, you can’t get a loan.” someone who will actually listen to you and say, “Okay, where are you trying to go financially? And how can we work your situation so you can get there one way or another?”
Ben: 100%. Great call. Fully agree with everything that you just said.
Ryan: Okay. Well, that gives you like a summary of the latest interest rate and latest lending updates for July 2015 from APRA. So, I hope that this has been interesting for you, guys. If you have any questions, you can shoot me an email, email@example.com. I’ll try and answer it if I can, obviously, I’m not a mortgage broker so I can’t promise anything. Also, you can check Ben out by going to PumpedOnProperty.com.au.
And let’s just talk quickly, Ben, what about – because you’re a buyer’s agent, in case people didn’t know – what about the customers that are coming to you looking to invest in property, is it still possible? Are you finding it harder?
Ben: Yeah. We probably help between 7 and 10 people per month now buy investment property and we haven’t had a single client knocked back on finance yet but had a decent amount – what I would call a decent amount, between 5% and 10% deposit. I’m not noticing the pain yet. Everybody, because we’ve got 2 really, really good mortgage strategists as part of our network, we haven’t had any issues with anybody trying to get financed. But from what I have been hearing, if you’re just working with your local bank manager or branch manager for one institution and they’ve always been able to get you money and now they can’t, that’s probably the time you just have to look a little bit broader.
Ryan: Okay. So, the people that are just going into ANZ and just seeing a bank manager there and just saying, “Can I get a loan?” they’re probably going to find it difficult. But if you can go to a mortgage broker, then your chances are much better.
It’s good to know, because you see so many investors investing every month, it’s good to know that people are still doing it. And, hopefully, that will ease people’s tension and stop them from freaking out as much.
Ben: 100%. Just because you can’t buy your $750,000 property in Sydney right now, 60K away from the CBD, doesn’t mean that there’s not an alternative area that’s going to perform just as well over the next 5 to 10 years that is worth half of that. And that’s kind of re-orientating the value of investment property and maybe you just have to get a little bit more creative on your strategy and look for something that is going to continue to help you move forward that’s more neutrally or positively-geared as opposed to another property in the portfolio that’s negatively-geared and taking $200 a week away from you.
Ryan: Sweet. And if people want more information, Ben, can they organise a strategy session with you to kind of understand their situation and if they can go again?
Ben: Yeah. So, we basically offer 10 of Ryan’s clients each month a 1-on-1 strategy session; which is pretty much just an hour with myself, looking at your entire situation, your goals and your plan for the future. And then we create a bit of a mudmap or a roadmap in terms of helping you walk towards financial freedom over the next 10-year period and we’ll help you identify exactly what that next property should look like and give you the tools you need to be able to move forward with that property.
Ryan: Sweet. And if you guys want to get a free strategy session with Ben, just go on to PumpedOnProperty.com and there’s a button there that says, “To organise your free strategy sessions” pretty simple to go through. And if you let him know you came from On Property, I will get a referral fee. So, just want to be transparent with that.
Well, thank you so much, Ben, for coming on and for talking about this. Look, it’s been good for me to get my head around it, being in a position where I’m going to be hopefully buying a home in the next year to understand that I don’t need to freak out. And then hopefully, for a lot of investors, they’ve understood that, yes, there’s a sweeping changes but they may or may not affect you.
Alright, guys, until next time, stay positive.
I remember, I was trying to buy a property in Moree back when I was 20. Like a positive cash flow property and mortgage brokers wouldn’t deal with me because I was such a low income earner at the time. Like, I got shunned by a lot of them who just wouldn’t want to touch me. And so, I ended up just going into Bank West at that time. And Bank West was the only lender that didn’t take rental income into account.
They took like an average yield of like 3%. This was like a 10.5% rental yield or 11% rental yield on this property and they would only take 3%. And so, I just got over the line in terms of lending. Like, almost didn’t get over the line. But then the deal fell through because the valuation came through under the purchase price.
Ben: Oh, below it was worth.
Ryan: And they’re like, “You can still purchase it but you need to come up with another $8,000” or something like that. I’m like, “Yeah, I don’t have $8,000 to cover up with.”
Ben: That’s one thing we didn’t talk about now, man. I’ve got a property that’s getting – that frankenstein’s getting 16% yield but the bank will only look at it now, across the board, 6% is where they’ve capped it Australia-wide, every institution. So, it means that that serviceability of $400 a week cash flow isn’t being looked at. In their eyes, it’s only $100 a week.
Ryan: So does this mean – like the previous where it used to be 80% of your rental income – does that mean now, they’re just –
Ben: Capped at 80% of 6%, man.
Ryan: 80% of 6%. So, it’s not even 6%? It’s 80% of 6%.
Ben: Yeah. It’s horrible! It’s really not awesome. That’s what’s stopping huge amounts of people moving forward.
Ryan: So, that means, so people who have invested in positive cash flow properties with the idea that this will improve my serviceability, because it’s spinning off positive cash flow, it’s going to affect them and make it hard for them to move forward?
Ben: It still will, yeah, definitely. It’s going to – only for the short term and then, this will all re-correct itself in the future. But just right now, being positively-geared doesn’t really mean. It means more like at 6%, your yield’s better than a 4% one in Sydney. But it’s still not really changing anything for you. You can’t use it as a strategy to move forward anymore.
Ryan: Yeah. Those people, who have 10% yields, are not going to improve their serviceability. Unless they’re getting so much positive cash flow spin-off that they can use that to save a deposit or reduce their debt.
Ryan: It’s not going to help them any more than a 6% property would.