Serviceability no longer a point of difference, says non-major

Finding a bank that allows you to borrow more is becoming increasingly difficult in an environment of increased regulation, according to an industry leader.

APRA’s 10 per cent speed limit on investor loan portfolios is still in place. In addition to cooling the investor lending market this effectively levelled the playing field – all banks must adhere to APRA’s cap. The bigger problem for investors is serviceability, which was a was once a key point of difference for lenders.

But according to Adelaide Bank general manager of third party Damian Percy, serviceability buffers are becoming more consistent across the industry.

“In the short term, there are still differences from a serviceability standpoint with investors between various institutions as they implement the recommendations from the regulators over time,” Mr Percy told Mortgage Business.

“But it will be more difficult to differentiate lenders based on serviceability. They're becoming more and more consistent. Shopping lenders or discriminating between lenders based on how much they'll lend will over time become less of a thing, as it becomes more and more consistent.”

When it comes to APRA’s 10 per cent threshold, Mr Percy says it appears that many of the major banks have now adjusted their portfolios so that their appetites for investor loans can be maintained.

He says the actual amount of funding available to investors hasn’t changed: “It moves between entities as those caps get managed.”

The side effects of a 10 per cent limit on bank books continue to appear in the pricing and policy changes of mortgage providers.

Increasing rates, dropping LVRs and tightening serviceability are some of the most popular measures that have been used by banks to regulate their portfolios.

There has been a resurgence in the take-up of fixed-rate home loans in recent months as borrowers fear further hikes could be on their way.

NAB chief operating officer Antony Cahill said fixed-rate home loans "have become increasingly popular" with customers. He noted that these applications "more than doubled" as a share of total applications in December, compared to in September last year.

Meanwhile, Mortgage Choice CEO John Flavell said fixed rates accounted for 22.04 per cent of all home loans written in December, up from 19.51 per cent in November.

[Related: Big four bank changes fixed-rate home loans]

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