Powered by MOMENTUM MEDIA
subscribe to our newsletter
Lenders eye concentration risk

Lenders eye concentration risk

Australian lenders are looking to gain a better understanding of their concentration risk to avoid having too much exposure to one property market, according to CoreLogic RP Data senior analyst Cameron Kusher.

Mr Kusher told Mortgage Business that strong investor activity, particularly in inner-city areas, is a potential risk.

“But I think if your loan book is spread out throughout the whole state or capital city it’s not so much of a risk,” he said.

Advertisement
Advertisement

“It is really making sure that when someone is lodging a loan application they have the ability to pay it back.”

Mr Kusher’s comments come after Bank of Queensland chairman Roger Davis revealed the bank’s “strict credit standards” involve fewer loans being written for properties in Sydney and Melbourne.

Speaking at the bank’s annual general meeting in November, Mr Davis said Bank of Queensland’s “strong risk policies” involved reducing its property exposure in riskier areas where growth has been the highest.

“We are comfortable with the bank’s existing housing exposure given our strict credit standards, strong risk policies and our increasingly diversified portfolio which remains underweight in the Sydney and Melbourne markets where growth has been the highest,” he said.

However, Mr Kusher said there are better ways to mitigate risk than just saying categorically ‘we are not going to lend here, we are not going to lend there’.

“I don’t think too many banks would be looking at a similar model,” he said.

“There is too much business to write in Sydney and Melbourne.”

 

Lenders eye concentration risk
mortgagebusiness
  • 23
    Days
  • :
  • 07
    Hours
  • :
  • 54
    Minutes
  • :
  • 01
    Seconds

EARLY BIRD CLOSING SOON
Have you secured yours?

Latest News

Stagnant housing market activity is expected to prolong the stay of borrowers in arrears, with the forecast fall in home values to be among...

The non-bank sector is expected to “lead the way” in 2019, after issuing more than 60 per cent of new home loans in 2018, according to S...

The volume and value of new residential buildings fell in the September quarter 2018, reflecting the “softening” housing market the HIA ...

FROM THE WEB
podcast

LATEST PODCAST: How a softening property market will impact the mortgage sector

Is enough being done to ensure responsible lending?