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Borrowers rush to reclassify loans following investor pricing hikes

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James Mitchell 5 minute read

St.George Bank has introduced new processes to cope with an influx of investors switching to an owner-occupied loan following recent price changes.

Speaking at the St.George Bank Flame Forum 2015 in Melbourne yesterday, the bank's head of credit, Rob Love, revealed that St.George has seen an increasing number of customers looking to reclassify their home loan since it introduced differentiated pricing.

Mr Love said the bank is currently measuring the number of customers who are switching their loans from investor to owner-occupied separately to its investor loan growth. He added that St.George is providing this information to APRA.

“The pricing differential change has seen a number of customers call through to our call centre and request to be transferred over," he said.

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St.George has a process in place – "a series of questions to go to the customers" – which it follows before reclassifying home loans, according to Mr Love.

“If necessary, if we are challenged, we might seek some evidence through notices of assessment to make sure they are not receiving any tax benefits or negative gearing benefits from the property being used," he said.

Mr Love stressed the importance of determining whether a customer is receiving negative gearing benefits from the property.

“We want to be really clear and upfront with our customers around that,” he said. “We’ve provided scripting to our call centres and to our branch network as well.”

Brokers have asked for more knowledge of the bank’s processes to educate their customers on loan reclassification and requested more information about St.George’s processes.

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Mr Love said reclassifications could have a significant impact on the rate of investor lending growth for the bank.

“There will be some reclassifications which will boost our owner-occupied component, but we will measure those separately and track those over time,” he said.

[Related: Mortgage Choice breaks down investor intentions]

Borrowers rush to reclassify loans following investor pricing hikes
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James Mitchell

James Mitchell

James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.

He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.

James holds a BA (Hons) in English Literature and an MA in Journalism.

 

 

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