With continued pressure from APRA to keep investor lending growth under 10 per cent, fears over non-resident loan docs and exposure to an increasingly fragile apartment market, the big banks have had plenty to contend with over the last 12 months.
Mortgage House CEO Ken Sayer told Mortgage Business that the writing was on the wall after the financial crisis, which saw many mortgage lenders leave the market.
“In 2009 every second bank, building society and credit union was folding or merging or closing their doors. Non-bank lenders were a casualty, in particular the guys that didn’t have their own distribution channel,” he said.
Mr Sayer explained that rather than making pricing and policy changes over the last year, as many lenders have, Mortgage House “made some profound decisions” in 2009.
“I didn’t want to put the company in a precarious situation again,” he said. “We made a decision that we only wanted low LVR, owner-occupied P&I PAYG mortgages. That’s all we chase.”
As a non-ADI, Sydney-based Mortgage House is either directly supervised or indirectly supervised by ASIC and APRA. Both regulatory bodies have turned up the dial on mortgage lending; APRA with its macroprudential measures and ASIC by targeting rate-rigging among the big four and commissions in the broking industry.
“The banks have been impacted severely and obviously brokers submit most of their business to banks,” Mr Sayer said. “The reason they have been hurting is because they haven’t had a similar strategy to Mortgage House going back to 2009. The four majors are not competing with me. They are competing with each other and chasing market share.
“In the pursuit of happiness, which is market share, they have opened the door to anything and everything.”
Almost a decade on from the GFC, Mr Sayer still recalls a “pretty nasty” time that put industry titans like Wizard Home Loans and RAMS in serious financial difficulty.
When the dust settled, Mortgage House was determined never to repeat the period.
“I said to my staff that I would never put them through anything like that again,” Mr Sayer said.
“The full truth is we are overweight in owner-occupied P&I low LVR, our S&P report puts our pool at an average LVR of 62.5 per cent, which is lower than any bank in the country.”