Regulator’s tough talk could drive mortgage shake-up

Non-bank lenders could be in a position to grow their volumes as banks start taking APRA’s hint to pull back from investor lending.

Banks are starting to take special measures to reduce their investor exposure, with Westpac recently increasing its serviceability buffer for investors and other banks tipped to follow suit.

Bluestone chief operating officer Peter Wood said this void could potentially be filled by non-bank lenders, which are regulated by ASIC rather than APRA.

“I guess it is an opportunity, and one thing non-banks have always done has actually had a buffer in place anyway, but there may be opportunity through their different funding lines to take some of that investor business,” he said.

Mr Wood told Mortgage Business that although Bluestone had no special plans to target investors, it would be a normal conversation for BDMs to have with brokers.

“Investor lending from a Bluestone point of view is probably 35 per cent of our business,” he said.

“We're always certainly looking for opportunities and also taking note of what is going on in the market and making sure we have a prudent lending policy.”

However, non-banks won’t automatically benefit from any decision by the banking sector to raise its serviceability buffer.

Ray Hair, general manager of national sales at Homeloans, noted that many non-bank lenders are funded by banks, allowing them to indirectly pass on the APRA pressure.

“Depending on where your funding is coming from, it's going to have exactly the same incentives for owner-occupiers versus investors,” he said.

Mr Hair pointed to an additional 0.15 per cent rate cut that Homeloans gave last week to owner-occupiers over investors, which followed a similar move from NAB-backed Advantedge Financial Services.

Mr Hair said that non-banks with alternate sources of funding could be in a position to pick up more investor business, but that most wholesale funding would still target owner-occupiers.

Firstmac managing director Kim Cannon told Mortgage Business that non-banks shouldn’t rush out to write more investor loans just because they might now have an edge over banks.

“We've got to be seen to be doing prudent lending,” he said, pointing to regulatory pressure that is also coming from ASIC.

“Everybody across the spectrum, whether they're a bank or a non-bank, are really focusing in on credit quality.”

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