Bank rules out cryptocurrency lending

Speaking to The Adviser, Teachers Mutual Bank’s head of thirty-party distribution, Mark Middleton, said that while the bank had had no inquiries for cryptocurrency through the broker channel, he was aware that it was increasingly fashionable for people to borrow money to procure cryptocurrency.

Mr Middleton said: “From a risk perspective and from the perspective of doing the right thing by our members, we don’t think it is something that our organisation should be seen to be doing. 

“I would say that it would be around risk and understanding that particular risk when lending to it. I think that the unknown is there. It’s early days and we’ve already seen the volatility of [the cryptocurrency market] and I just don’t think the market has the sophistication to understand it. 

“The bottom line is, realistically, we don’t have any interest from an organisational perspective to lend for it.”

The bank has also announced that, from today, it will increase the maximum loan-to-value ratio (LVR) for residential investment loans.

The LVR will be increasing from 70 per cent to 80 per cent.

Mr Middleton said: “Controls have always been in play there to ensure that we keep inside APRA’s 10 per cent cap. Originally, we were as far as 95 per cent, then we dropped it down (over a period) to 70 per cent to stop it from moving so quickly.

“We have a number of controls in place (whether it be surplus levels that we have had to have from a responsible lending perspective, the IO pieces and pricing) and LVR was just one of the levers that we used to ensure we remained within the 10 per cent cap, so we’re just easing it off a bit now from 70 [per cent] to 80 per cent, but there are still a number of other controls in place.”

Lastly, the bank’s minimum living expenses figures will change based on the release of Q4 2017 Household Expenditure Measure (HEM) data. As such, the serviceability calculator on the TMBL Broker Portal, the NextGen ApplyOnline system and the lending reference guide will be updated.

Any application that has been conditionally approved prior to 12 March 2018 but not funded as at that date does not need to be reassessed under the new serviceability figures.

All new applications, and applications where the conditional approval has expired, will be assessed using the current applicable serviceability figures at that time.

On top of these changes, the mutual bank has also announced that its Lender’s Mortgage Insurer, Genworth, has updated its delegated underwriting authority (DUA) with the bank that will provide a more streamlined home loan application and assessment processes for brokers and clients.

From 1 March 2018, Genworth will adopt the bank’s existing underwriting guidelines for home loan applications requiring LMI, submitted across all brands.

As such, the majority of home loans will be assessed and approved as per the bank’s credit assessment criteria and will not also need to additionally meet Genworth’s underwriting guidelines.

Brokers will therefore no longer need to complete the Genworth servicing calculator for applications that require LMI.

However, the bank has stated that there may be “nominal instances” where applications will still need to be sent to Genworth for approval. On these occasions, Genworth’s credit policy will apply and the Genworth servicing calculator will need to be completed.

[Related: Mutual banks cut owner-occupier IO rates]