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Sam Boer, CBA’s general manager of broking, told Mortgage Business that at its peak, CBA was seeing a couple of hundred requests per day, although that has now started to drop off.
“Just through our own data mining, we've found a lot of customers – and we're talking in the tens of thousands – who are living in their investment properties,” he said.
APRA’s investor lending cap, which led to higher rates being introduced on investor loans, forced the bank – like its peers – to update its processes to be able to work through this surge of refinancing activity, Mr Boer said.
This comes at a time when lenders were already under pressure to improve the speediness of their loan approvals procedures.
“We had a big run on of customers requesting a switch and we got backlogged, but we put the resources in, made the process nice and simple, and in fact I think we've still got more to switch to be honest," he said..
“We set our new process up. It took a little while to get our switching process sorted for this, but now it's there, I think it is mainstream.
“Usually the call comes in because they've noticed something has happened to their interest rate, so we talk them: 'Are you living in the property?' And they say: 'Yes'. Okay, they answer a few questions, they sign a declaration, we do the necessary verification checks and then we switch it over and they're happy with the world again,” Mr Boer said.
St. George Bank’s head of credit, Rob Love, admitted that the non-major lender also had to implement new procedures for dealing with an influx of investors seeking to switch to an owner-occupied loan.
Mr Love said the bank is currently measuring the number of customers who are switching their loans from investor to owner-occupied separately to its investor loan growth. He added that St. George is providing this information to APRA.
Vow Financial chief executive Tim Brown said that the reclassification of home loans will add greater complexity to the lending environment.
"Lenders will now have to come up with a list of questions that borrowers will have to answer or they'll have to show some type of identification to prove that they're actually living in their address,” Mr Brown said.
“I think that will probably be the next level of qualifying buyers to make sure they do qualify for a certain rate.”