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The effectiveness of APRA’s regulatory actions over the last year has left the major lender with plenty of capacity to continue funding interest-only and investor mortgages.
NAB’s full-year results for the 2017 financial year reveal just how effective APRA’s caps on interest-only and investor home loans have been.
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The bank’s IO flows were hovering around 40 per cent heading into the 2017 calendar year, but have since fallen to 25 per cent of new lending, below APRA’s 30 per cent limit announced in March.
While property investors account for 42 per cent of NAB’s total book, growth has only been 6 per cent over the year to 30 September, below owner-occupied lending (7 per cent) and well below APRA’s 10 per cent speed limit.
“The investment lending caps are all still in place. NAB, along with most of the majors, are well under those caps, so we are open for business on all of those things,” NAB’s general manager of broker distribution, Steve Kane, told The Adviser. “So, there is really a strong appetite for growth.”
However, in addition to APRA’s macro-prudential measures, banks have been tasked with keeping a close eye on mortgage quality and responsible lending practices.
Mr Kane said that the bank’s education initiatives over the last 12 months have led to a greater awareness among brokers about the quality of deals they submit.
“We believe in our Knowledge is Everything roadshow and we believe in the Better Business Summit because those initiatives bring brokers together and educate, train and provide brokers with an opportunity to learn form each other and to network,” Mr Kane said.
“It also obviously recognises the value of excellence in the market, which is important. You really do want to hold up the people doing the right thing.
“What we have seen is an improvement, and it is from those brokers who attend those events where we have seen that improvement. The awareness has lifted.”
While he admits that credit quality between broker and proprietary channels is very similar, Mr Kane said that mortgage brokers are journeying towards a deeper relationship with their clients.
“Brokers recognise that it [lending] has to go beyond the transaction. We are seeing that happen more and more.”
[Related: ‘A very good year’: NAB grows broker share by 22%]
