5% doesn’t sound like much and, in some cases, it isn’t. Drinking 5% more water each day, walking 5% further or working 5% harder at the gym might be completely achievable, but the Reserve Bank’s decision to allow the trading banks to increase their investment lending from 65% to 70% is kind of a big deal, for a few reasons.

For a start, as any First Home Buyer who has had to find more deposit will tell you, 5% is a big deal – especially when it is 5% of hundreds of thousands of dollars. More specifically for Investors who have been through a few loan-to-value (LVR) tightening cycles and may be dealing with more than one investment property, the ability to borrow some more will come as a relief to some and a real opportunity for others.

The other reason this change is important is because it signals that the Reserve Bank is satisfied that their fears of ongoing “runaway” property value increases have now calmed. Whilst existing property owners will ask why a perceived lack of large property value increase is a good thing, prospective property owners will be breathing a sigh of relief. More importantly for every borrower, it means the heat is off the Reserve Bank to introduce more draconian measures for controlling value increases (for the moment), which would have hit a lot harder, and were being seriously considered.

Right now, Investors can borrow more against equity, some properties are better priced than before, and borrowers continue to enjoy record low interest rates. On the less positive side, banks continue to look at servicing very closely and vary hugely in their appetite for different types of property and individual borrower situations. Having the ability to borrow 5% more against property only works if you can get the lending. Make sure you get the right advice.