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APRA’s focus on investor lending could have a significant impact on brokers who specialise in that segment of the market.
The prudential regulator’s chairman, Wayne Byres, recently warned that “the current economic environment for housing lenders is characterised by heightened levels of risk”, partly due to the strong growth in investor lending.
Several lenders have recently made it harder and more expensive for investors to qualify for a loan, with Westpac raising its serviceability buffer, Bankwest tightening its investor LVRs, and Homeloans and Advantedge offering different pricing for owner-occupiers and investors.
Aussie Parramatta franchisee Ross Le Quesne said these changes to investor loans will have a big impact on his business.
“Approximately 70 per cent of my business is from investors, so it’s going to have a big effect on my business,” he told The Adviser.
“We’re going to have to strategically look at options for how we continue to grow the business.”
Mr Le Quesne said he has not had to proactively market his business due to the strength of the market, but that he would now have to start “turning on some other taps” to adjust to the banks’ changes.
“One area that would have a decent capacity is your first-time investors because a lot of first home buyers are being priced out of the market at the moment,” he said.
“Considering that Sydney’s median property price is close to $1 million, first home buyers will present more as first-time investors, so that would be one area we might look at.”
However, Jason Back, managing director of the Australian Lending & Investment Centre, does not see the changes to investor lending impacting his business in a huge way.
“Our clients are generally high-quality and affluent, so the reality is that it’s not going to affect them or our business,” he said.
“We’re very cautious about how we structure our clients’ debt anyway, so we actually welcome that quality overlay from the banks that they’re working with us and our clients to ensure that it’s a safe investment for them.”
Mr Back told The Adviser that investor-focused brokers should look at the quality and type of investors they attract and take on.
“People could possibly look at other models, but I think the quality aspect is more important,” he said.
“The first home buyer market isn’t a big portion overall, and comes with it its own challenges, from non-conforming to house-and-loan construction – brokers need to be technically proficient in those areas.”
[Related: FHBs ‘copping a bashing’, says Symond]
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