What the top 5 banks think about investor lending

MPA asked the top performers in our Brokers on Banks survey about the impact of investor lending restrictions

For MPA’s forthcoming Banks on Brokers special report, we had access to the third-party channel heads of the top five performing banks. Naturally, investor lending was on the agenda, and their collected responses provide essential reading.

The full Banks on Brokers report will be on desks on July 20th

MPA: Will APRA’s recent restrictions on investor lending change your relationship with brokers over the next 12 months?

WESTPAC: Tony MacRae, general manager of broker distribution
At a fundamental level, I don’t think it’ll change our relationship; our relationship is built on more than one dimension, and it really is about having a strong partnership with our brokers. What we’ve done and will continue to do is be very transparent in the way we communicate what we’re doing to react to regulatory change, market change, the factors that are influencing the market at the moment. We’ll continue to be open and transparent to ensure brokers not only understand the what, but we’ll give some context as to the reason why these things are happening. We’ve always taken the approach that we’d treat both channels equally on this front.

COMMONWEALTH BANK: Sam Boer, general manager of broker sales
I think with the pressure that APRA is putting on CBA and the industry around this that rightly they have a concern, because it’s been a hot market in Sydney and Melbourne. I think there’s a lot of complexity, and I’m a bit concerned about the potential impact it could have on the industry; for example, we saw what happened in 2006, when the NSW state government decided to introduce new taxes on investors, and it pretty much stalled that segment for a good few years. In fact, in some ways, that slowdown is probably why you’re seeing such strong demand in the NSW market over the last 12-18 months.

Our team are working with APRA very closely to make sure that we don’t breach that 10% cap, and CBA is in pretty good shape. Already we’ve changed our pricing policy, and I’m pleased to report that already we’ve had a reduction in our investor mix, but we’ve had a corresponding increase in our owner-occupier mix, which is what APRA cares about.

I don’t know how this is going to play out, so all we can do is ride it as it happens and adjust our business accordingly. It’s not going to make any difference in terms of CBA’s relationship with the broker channel … it’s across all channels, whatever changes are made.
 

ANZ: Keiran Evans, head of third party relationship channels
ANZ shares APRA’s view that investment lending for residential property needs to be closely managed across the industry.
As the market continues to change and evolve, our focus is to keep our brokers informed as quickly as possible, and of course we’re focused on equipping our BDM team to help our brokers navigate any hurdles that come their way.

Ultimately, we are all striving for the same outcome ¬– to deliver the customer the best home loan experience possible. In short, we are going to continue to work closely with our brokers to ensure that their needs are being heard and that we continue to deliver outcomes that exceed their expectations.

MACQUARIE BANK: Doug Lee, head of mortgage sales
Macquarie is committed to working with regulators and its distribution partners to help ensure the residential home lending market continues to operate in a responsible and sustainable way. We are supportive of APRA’s approach to ensure there is sustainable and prudent lending in the investor market. We’ve already made some policy changes for investor loans and are continuing to review and make further changes.

NAB BROKER: Steve Kane, general manager
Not at all; it’s absolutely channel agnostic. This is in relation to the overall market; it’s not specifically for broker-introduced or retail customers; it’s really the regulator saying that investor credit is growing, and they want to put restrictions on that, which are uniform across the industry. This is not reflecting on brokers; it’s reflecting on the mortgage market and investors in particular, so we don’t see it as a broker-specific.

We believe that customers will use brokers because of the added complexity, so this will enhance the broker proposition because customers seek advice, as we can tell with over half of the market seeking advice from broking … we think that’s a real positive for broking. But also there’s been a lot of investor lending; property markets change over time, and as that investor lending cools, then brokers should be looking at other avenues of revenue. Owner-occupied lending will become very competitive, if it wasn’t already, and I think there are other things like small business and equipment finance that brokers will enter into over time.

The full Banks on Brokers report will be on desks on July 20th