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One non-bank has not noticed an increase in volumes since APRA’s tightening of bank regulations on investor loans.
Firstmac chief financial officer James Austin said that while there has been speculation that non-bank lenders could see a spike in loan applications from investors since APRA’s move on banks, this has not been the case.
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Despite not being regulated by APRA, Mr Austin said Firstmac has made its own policy adjustments ahead of any broader prudential measures to control house prices.
“In response to recent tightening of policies targeting banks, we have ceased SMSF lending and will review our investor loan variable interest rates, on top of the robust controls we already have in place,” he said.
Mr Austin said Firstmac’s recent $1 billion RMBS deal is proof of its outstanding credit quality.
“Our success in bond raising is due to our credit quality, which has never been better,” he said.
“Our 30-plus days’ arrears numbers are at 0.61 percent, which means more than 99 per cent of our borrowers are current in their payment schedule. This is better than industry averages which are dominated by APRA-regulated banks.
“Eighty-nine per cent of the loans written in 2015 had a loan-to-value ratio below 80 per cent. Just because our interest rates are at record lows doesn’t mean we have relaxed our credit criteria.”
Firstmac’s growth rate is currently at 20 per cent, but its percentage of investment loans fell 3 per cent in the 12 months to April.
“The mix of investment loans has not increased even though our growth has accelerated, which shows we are a viable option for owner-occupiers and investors alike,” Mr Austin said.
“Non-banks remain a crucial pricing point to keep the banks accountable to the lending public.”
