SMSF home loan borrowing surges in March 2021 quarter

author-avatar By on May 27, 2021
SMSF home loan borrowing surges in March 2021 quarter

More self-managed super fund members are taking on debt within their portfolios, with new data revealing a $3.5 billion rise in limited recourse borrowing arrangements in the first three months of 2021.

The ATO's latest Self-managed super fund (SMSF) quarterly statistical report for March 2021 shows more than 6,000 new SMSFs were established in the three months to 31 March, with the total number now sitting at just under 600,000. 

Total estimated SMSF assets increased by 3% over the quarter to $787 billion, and while the most common asset types are still listed shares (26%) and cash or deposits (19%), the biggest increase was seen in property. 

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval

VariableMore details
SELF MANAGED SUPER FUND LOAN

SMSF 80

  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees
SELF MANAGED SUPER FUND LOAN

SMSF 80

  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees
FixedMore details

SMSF 80 Fixed 5 Years (Purchase) (New Customer)

VariableMore details

Liberty SuperCredit SMSF (LVR < 60%)

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given Rates correct as of October 28, 2021. View disclaimer.


The total value of real residential property held by SMSFs grew by 6.36% ($2.64 billion) to more than $44.1 billion over the quarter, while limited recourse borrowing arrangements (LRBA) - which are often utilised by SMSFs for investing in property - also rose by 6.36% ($3.55 billion) to $59.4 billion.

Such loans limit the recourse of the lender, in that the lender can only repossess the asset (e.g. the investment property) purchased through the loan to recoup the debt should the borrower default. This is unlike the typical home loan, where the lender usually has full recourse to go after other assets too, such as cash in the bank or a stock portfolio.      

Related: What can you invest in with an SMSF? 

The ATO's data shows LRBA use stayed relatively stagnant over 2020 when the pandemic hit, after increasing in value by more than 10 times from $400 million about a decade ago. 

This recent increase is also in line with the Australian Bureau of Statistics' (ABS) most recent household lending data, which not only saw new loan approvals hit a new record high in March, but also recorded a substantial increase in investor lending after a 20-year low seen last year.

Prudential regulator data also shows total superannuation assets increased 3.1% for the quarter and 13.9% over 12 months to a record high of $3.1 trillion.


 Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval

VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^

Rates correct as of October 28, 2021. View disclaimer.

The big four banks and many other institutions no longer offer LRBA loans due to their perceived risk and complexity, with the likes of Westpac and Commonwealth Bank ending their involvement in 2019. 

The 2014 financial system inquiry recommended banning LRBAs to “prevent the unnecessary build-up of risk”, with lower-income users generally the most disadvantaged by using these schemes. 

See also: When are SMSFs not worth the cost?

But it appears that hasn't deterred SMSF customers from using these loans.

Lenders still offering SMSF loans at the time of writing include: 

  • La Trobe Financial
  • Liberty Financial
  • Bank of Queensland (BOQ)
  • Switzer Home Loans
  • Mortgage House
  • Freedom Lenders
  • Reduce Home Loans
  • Rate Chaser Home Loans
  • LJ Hooker Home Loans
  • Regional Australia Bank

Photo by MayoFi on Unsplash

Disclaimers

Savings.com.au does not provide tax advice. This material has not been prepared by Savings.com.au and is for informational purposes only, and is not intended to provide, and should not be relied on for tax advice.

For tax advice relevant to you, visit the ATO or consult an independent tax advisor

Latest Articles

author-avatar
William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

Be Savings smart.
Subscribe for free money newsletters.

By subscribing you agree to the Savings Privacy Policy