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Banks unlikely to follow AMP in cutting off investor lending

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Huntley Mitchell 4 minute read

As AMP Bank announced it will cease residential lending to investors, don't expect too many other lenders to follow suit, says the director of one of Australia's biggest mortgage groups. 

AMP announced yesterday that it will no longer accept new or assess existing investor home loan applications in response to APRA’s crackdown on investor lending, with the decision expected to last “until later in 2015, depending on market conditions”.

However, Connective director Mark Haron said brokers should not expect a significant number of lenders to pull out of the investor market altogether.

"Obviously we're seeing lenders increase interest rates and reprice their investment lending and interest-only products to stem the flow of investment loans as they rush to meet APRA's requirements, but I don't think we'll see many more lenders do the same," he told The Adviser.

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In response to APRA’s guidelines to limit residential investor lending growth to 10 per cent across the market, AMP will also increase its variable interest rates on all existing investor loans by 0.47 per cent from 7 September.

The bank said all investor loans that have been approved will be subject to the 47 basis-point increase on settlement.

“We appreciate the position this puts our customers in and will be working with our distribution network to actively communicate with them,” AMP Bank managing director Michael Lawrence said.

“Australia’s property market is experiencing high levels of investor property lending growth, and we are supportive of the regulator’s intention to slow this growth to appropriate levels.”

AMP has also reduced interest variable rates for new owner-occupied loans that are part of its Professional Package to as low as 4.12 per cent.

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Meanwhile, NAB became the third major bank to raise interest rates in response to industry concerns surrounding investor lending growth, announcing yesterday that it has increased its variable rates on interest-only home loans and line of credit facilities by 29 basis points.

[Related: APRA stats show investor lending crackdown still work in progress]

Banks unlikely to follow AMP in cutting off investor lending
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