Banks announce raft of lending changes

Two banks have made significant changes to their investor lending policies, while three non-majors have slashed some of their fixed rates to below 4 per cent.

Teachers Mutual Bank announced that it is temporarily withdrawing from new investment home loans in an attempt to curb its success in the sector and be in line with APRA’s annual investor growth cap of 10 per cent.

“The strong demand from our membership base has meant our investment home loan growth has not slowed in line with our expectations, despite the bank applying a number of micro-policy and pricing disincentives during 2016,” Teachers Mutual CEO Steve James said.

“In any other context, the strong demand for our investment loan products would be very pleasing, but we take our responsibilities to the regulator extremely seriously, so we have proactively made the decision to temporarily withdraw from investment home lending to new business, effective Wednesday 25 May 2016.”

To coincide with its investor lending change, Teachers Mutual has revealed new fixed rates for its Teachers Fixed Option Home Loan.

The bank’s three-year fixed rate has been reduced by 25 basis points to 3.74 per cent (with a 4.88 per cent comparison rate), while its four and five-year rates have been cut by 35 basis points to 3.99 per cent (with comparison rates of 4.85 per cent and 4.77 per cent respectively).

In a statement issued to Mortgage Business, Westpac said it has increased the maximum LVR for its investment loan products from 80 per cent to 90 per cent.

“We were the only one of the majors who was at 80 per cent and this change is bringing us in line with market,” the bank said.

Meanwhile, MyState Limited has announced that its banking businesses, MyState Bank and The Rock, have reduced their three-year fixed rates by 44 basis points to 3.74 per cent, effective tomorrow.

The new rate applies to new principal-and-interest loans for owner-occupiers that exceed $100,000 and have an LVR of less than 80 per cent.

Furthermore, MyState customers who refinance loans of more than $400,000 from another lender with a maximum LVR of 80 per cent will be eligible for a $1,500 cashback reward, available for a limited time only.

Sandi Sims, MyState’s head of broker, said the group’s new rates are further proof of its commitment to providing brokers with great products and service to help them win business.

“Operational enhancements we have made over the past year have significantly improved our ability to meet the needs of brokers and their customers,” she said.

“We are looking to write more business and further refine our processes to make our partnership with brokers even stronger.”

ME has also announced reductions to its three-year fixed rates, with the industry super fund-owned bank’s investor rate cut by 10 basis points to 3.99 per cent (with a 5.14 per cent comparison rate), and its owner-occupier rate cut by 8 basis points to 3.89 per cent (with a 4.75 per cent comparison rate).

Lino Pelaccia, general manager of broker at ME, said the bank was able to facilitate the new rates through recent cheaper fixed-rate funding.

“The cost of fixed-rate funding has fallen significantly since the RBA cut rates in early May – savings that ME has decided to pass on to customers in the form of cheaper fixed-rate home loans,” he said.

[Related: Lenders still 'dialing down' on SMSF market]

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