CANBERRA: Commonwealth Bank of Australia’s increased rates and tougher lending for property investors has been a blessing for some competitors, who are generating record new loans by welcoming spurned borrowers. Retail titan Australia and New Zealand Banking Group and regional tiddler Auswide, another listed bank with assets totalling more than $3 billion, are both claiming record-breaking months for new mortgages and refinancing since CBA raised rates. “Off the back of a record-breaking December, I am thrilled to say that January was yet again another record-breaking month for ANZ,” Simone Tilley, head of national broker distribution, has written to mortgage brokers. “We continue to accept both owner-occupier and investor-borrower applications,” she said. Auswide, which recently overhauled administration to improve mortgage processing, claims current loan volumes are doubling because of attractive rates and willingness to take on new business. Chief executive Martin Barrett said: “We are picking up some from the CBA and refinancing across the four major banks. Borrowers seem more willing to scout around for the best deal.” Neither ANZ nor Auswide would disclose the volume or value of increased loans. Westpac, which is also targeting property investors, did not comment.
CBA’s rate rises and tougher lending conditions are estimated to have sent $1 billion a month to smaller lenders, according to John Flavell, chief executive of Mortgage Choice, a listed mortgage broker. Mortgage Choice said loan inquiries are at record highs. But lenders are reacting differently to demand spikes, particularly from investors in Melbourne and Sydney. Some lenders’ fears of being swamped by a flood of rate sensitive borrowers are forcing them to increase prices and toughen conditions. Others are worried about hitting the Australian Prudential Regulatory Authority’s speed limit of 10 per cent annual growth in property investor lending. For example, Citigroup on Thursday banned mortgage lending to all overseas’ borrowers except elite high net-worth clients because of concerns about capacity to handle the number of applications following the withdrawal of most other major Australian banks. Others with bigger lending books and back office capacity for processing applications are offering special discounts, switching deals and promises to maintain lower lending rates, market analysis reveals. For example, ANZ is offering customers up to $1200 for new home or residential investment loan refinancing deals. Westpac is also attempting to attract new business from disaffected potential CBA customers with special deals.
Auswide’s Mr Barrett said his bank had recently completed an overhaul of its administrative systems to enable improved loan application processing. “We were quiet in the first half of the (financial) year. But we have improved our processing and offered new fixed-rate and variable deals for owner-occupiers. You have to stay on top of the APRA speed limit. The smaller you are the quicker you get close to it,” he said. Other lenders continue to increase rates because of rising wholesale funding, regulatory costs, the speed limit and concerns about administrative capacity to process extra loans. For example, ING Direct, which declined to comment, quickly followed CBA’s move and increased variable interest rates for investment loans by up to 15 basis points. Other lenders continue to discreetly raise rates and toughen conditions. Teachers Mutual Bank and Unibank, which last year temporarily withdrew from new investment lending to reduce annual growth from about 15 per cent, are raising rates on several mortgage products by 15 basis points. TMB deputy chief executive Brad Hedgman said: “Many lenders have already increased rates for home-loan products, and there are increasing signs that we are headed for a higher rate environment internationally. This rate increase is in line with these reasonable market expectations.”
