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Last month, Westpac announced it would lower its maximum LVR for new customers; potentially opening the floodgate for other lenders to follow suit. But what do our industry pundits think?
WILL OTHER LENDERS FOLLOW WESTPAC’S LEAD AND REDUCE THEIR MAXIMUM LVRs?
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MICHAEL MAIORANO
Australian First Mortgage
“I THINK the majors will be inclined to follow Westpac’s lead, while the non-bank lenders will be happy to keep LVRs just as they are. Some of the majors – notably the big two – have lent too much money over the past couple of years and now they need to balance the ledger. They will choose to concentrate on their existing database rather than seek out new customers.”
LISA CLAES
ING DIRECT
“THE RISK appetite of individual lenders will drive not only their LVRs but also other risk parameters. Competition in the high LVR space remains healthy, with more risk appetite emerging from non-majors. We have noticed that increased competition is emerging in the mortgage sector and this is a great thing. Moves like Westpac’s will create opportunities for others, with signs of risk-based pricing gaining popularity in the home loan market.”
JOHN RADICCHI
Baccus Investments Limited
“I THINK other lenders will follow Westpac’s move and lower their LVRs. Many will do so in response to the proposed national credit reforms on responsible lending. Loans that offer LVRs of more than 90 per cent carry a risk for borrowers, especially first time borrowers who may fail to take into account potential changes in their circumstances like starting a family, falling house prices or rising interest rates.“
SOF TSIALTAS
BEAT Home Loans
“NO QUESTION; we can expect more of the same from the other banks. [However] BEAT has no intention of reducing LVRs in the near future. We continue to offer products up to a 95 per cent LVR as part of our unique guarantee to drive competition in the market. “
JUSTIN DOOBOV
Intelligent Finance
“WHILE I believe that some of the majors may follow Westpac’s lead and reduce their LVRs, I also think other lenders will continue to lend between 90 to 95 per cent LVR loans. However, while all banks may not pull back, I think many lenders will take steps to tighten their lending criteria in order to de-risk their loan books. This may include extending the three month genuine savings period to six months, or proof that a borrower has been in the same job for two years.”
