An exclusive new survey of more than 750 readers of The Adviser has revealed that a majority of brokers plan to write more business with non-banks as a result of APRA’s investor lending crackdown on banks.
According to a poll conducted by The Adviser, 64 per cent of brokers think they will write more loans with non-banks.
However, while many brokers and industry figures agreed that APRA’s investor lending crackdown on banks is a great opportunity for the non-banks to capture more market share, they have been advised to remain prudent in their lending habits.
Home Loan Experts managing director Otto Dargan said non-banks are well placed to pick up volume from APRA’s crackdown.
“I don’t think they will be that aggressive, as that would invite more legislation,” he added.
Australian First Mortgage managing director David White said the opportunity for non-banks is massive as they are not regulated by APRA – but that prudent lending standards must be observed.
“It will also depend on the LMI providers not reducing LVR,” he said.
KeyInvest chief executive Chris Burns said the fact that non-banks are regulated by ASIC gives them “a window of opportunity” to gain market share, but added that they will want to align their lending habits with the big four banks.
Former Resi chief executive Lisa Montgomery said there is certainly potential for non-banks to “stand out from the crowd” when it comes to interest rates and approval criteria.
“That said, I have absolutely no doubt that the non-bank sector will want to remain prudent when it comes to lending practices and legislative requirements,” she said. “The regulators are watching.”
Neill Rose-Innes, chief information officer at Mortgage Choice, said non-banks have not yet indicated any significant changes to their investor lending policies, and may see APRA’s crackdown as an opportunity to grow their investor portfolio.
“The focus will be on the quality of assets to lend against, the overall client portfolio and how they are leveraged,” he said.
However, some industry figures, such as Astute Financial director Brad Wood, believe APRA’s crackdown will not increase non-bank volumes.
“I believe that the spread of investment applications amongst our funding panel will not be affected. Therefore, there will not be an increase in investment volume to non-bank funders,” he said.
Damien Roylance, partner at iProperty Plan, said the brokerage’s clients prefer the big banks because they are so competitive with price.
Andrew Littleford, managing director of short-term lender Interim Finance, said most borrowers prefer to align themselves with the major banks.
“A lot of investor loans are written on a cross-collateralised basis as fewer investors have the hard cash to meet the deposit gap necessary to write a standalone deal with another funder,” he said.
“Any premium added to the investor rate will historically be passed on to the tenant.”