Your say: APRA crackdown

What isn’t up for debate however is that with lenders changing policy and pricing on a regular basis with regards to investment borrowers, the role of a good mortgage broker has never been more important.

Access to a wide range of lenders will become increasingly important and as more mainstream lenders look to wind back from certain levels of investment lending, brokers could very well lead their investment borrowers to the products and services of the non-banks who aren’t governed by ASIC.

When asked whether brokers think they will write more investor business with non-banks as a result of APRA’s crackdown and major banks changing
their policies a resounding 64 per cent of the 767 respondents said “yes”. Here we share just some of the hundreds of comments we received from brokers…

• “Yes definitely– the changes that banks have made to assessment will cause a big swing away from them.”
• “There is certainly potential for those non-banks supplying product through the third-party channel to stand out from the crowd in relation to interest rate
  and approval criteria. That said I have absolutely no doubt that the non-bank sector will want to remain prudent when it comes to lending practices and legislative requirements. The regulators are watching.”
• “Opportunity for non-banks is massive as they are not regulated by APRA, however prudent lending must be adhered to. Will also depend on the LMI providers not reducing LVR.”
• “Some are already cheaper and easier to deal with so their business should only grow.”
• “At present non banks have generally not indicated any significant shift in their policies in relation to investors
• so they may well see this as an opportunity to generate more flow in this segment to grow their investor portfolio. The focus will be on the quality of assets to lend against (medium- and longer-term outlook), and the overall client portfolio and how they are leveraged.
• “We select lenders for investors for a variety of reasons – it doesn’t matter to an extent if they are a major or a non-bank. Some clients for some reason feel more comfortable with the majors at the start but when you explain things a little further, there are other criteria that will be considered well ahead
  of whether you go with a major or not. ‘Does it fit with my strategy and gives me the best structure for my property investment plan’ is more important. If it’s with a non-bank then this is the one we will suggest and most clients will choose.”
• “It seems that the APRA recommendations are taking the market back to the days when lenders charged more for investment loans. The non-banks
  (from memory) were the ones that did not differentiate between owner-occupied and investment loans.”
• “Can’t see how you can give the majors investment lending when it’s clear they can’t accommodate the application based on APRA requirements. No question you will see increased investor loans being declined for no good reason as the major lenders’ appetite continues to decrease.”
• “Yes, I believe non-bank investor lending will become a viable lending option in the short term. Currently the non-bank lenders have demonstrated a strong appetite for this segment but it won’t be too long before they are also constrained by APRA requirements.”
• “At the end of the day all banks and non-banks get their cash from the same spot. At the moment I think that there is panic amongst some banks
  and common sense will prevail.”
• “As non-banks are regulated through ASIC as opposed to APRA, they have a window of opportunity to gain market share. That said they too will want to align their lending habits to those of the big 4.” “I expect the non-bank sector to pick up the loss from the majors, big time. And it serves them right for cowtowing to APRA and as a consequence increasing their margins. A win-win as far as the majors are concerned.”
• “As APRA’s role is to ensure the safety and security of depositors’ funds, now is a prime time for non-bank lenders to have a boost, which I am sure they
  have waited patiently for.”
• “Possibly, most clients tend to want to stay with known banks. As we saw with the 3.99 per cent interest rates, investors are a little more open to chasing better rates with less well-known funders. If non-banks price it right I’m sure they will do more business.”
• The non-banks will lose business to the majors. Whether the regulators like it or not, they have played right into the hands of the big four. These measures will only close competition, and will serve no purpose other than that.”
• “Depending on policies and pricing. I understand banks tightening credit policies and servicing guidelines but I don’t accept the need for them to reintroduce differential pricing for investors compared to owner-occupiers. I see this purely as opportunistic money grab by the banks that is not justified. How long will there be this state of play where non-banks are not also affected? They might try to peg themselves as the investors’ choice but again if their percentage of investor loans gets too high they too will try to cut back so as to provide a balanced approach to home loan lending. It’s hard to say,
  all clients want the best deal so if the best deals are outside of banks, then yes it’s possible.”
• “My business is 90 per cent investment and if the majors restrict my clients’ capacity to lend on investment then there will be savvy non-bank lenders that will pick up and run with this niche market. My loyalty lies with my clients and helping them achieve their property goals ... not the banks!”