APRA banking figures for October show that investor loans account for more than half of all mortgages for HSBC Australia and Bank of Sydney.
HSBC, which left the broker channel in 2006 after selling its book to Firstmac, currently has a mortgage book of $8.7 billion, with investor loans accounting for 54.6 per cent ($4.8 billion).
Meanwhile, new third-party entrant Bank of Sydney's loan book, of which 66.6 per cent are investor loans, is valued at $332 million.
There is clearly an appetite for smaller lenders to capitalise on a burgeoning investor market.
Speaking to Mortgage Business, Bank of Sydney chief executive Julie Elliott said that while a high proportion of investor loans may be a concern for some banks, this is not a concern for the Bank of Sydney since it does not automate its credit decisions.
“We still do manual credit handling,” Ms Elliot said. “We don’t have auto decisioning at this point so every loan is manually assessed at the bank, which enables us to manage that risk,” she said.
“We look at how quickly people have bought on their investment portfolio, their ability to handle it in a period of vacancy.”
Ms Elliot added that, being a boutique bank, Bank of Sydney's customers are mostly high net worth individuals who have capacity to handle investment portfolios. By comparison, Westpac’s investor lending exposure is 44 per cent, the highest of the majors.
CBA’s exposure was 34.5 per cent in October, while ANZ and NAB had investor loan exposures of 28.8 per cent and 27.8 per cent respectively.
The figures come at a time when investor lending is in the spotlight and could potentially be hit by new lending curbs including higher rates and loan serviceability buffers.
The Reserve Bank of Australia’s recent jawboning efforts appear futile, with its October credit figures pointing to further acceleration in credit growth to investors.
On an annualised basis, investor lending grew 9.7 per cent in October, up from 9.4 per cent in September and 9.1 per cent in August when the central bank first flagged the issue.
While the figures show no signs of a slowdown in investor lending, strengthening the case for macroprudential tools, industry leaders have slammed plans to cool the market.
Mortgage Choice chief executive Michael Russell said curbing investor activity was “perplexing” and “fruitless”.
Speaking at the national mortgage broker's annual general meeting last month, Mr Russell criticised the central bank for flagging potential regulatory intervention to curb investor activity in the housing market.
"I'm a bit perplexed as to why we would be singling these people out," Mr Russell said.
"It just seems quite fruitless to be curtailing demand,” he said.