A closer look at the mortgage portfolio growth of the big four over the last 12 months reveals that some major lenders still have plenty of capacity to finance property investors.
APRA’s latest Monthly Banking Statistics show that ANZ still has the smallest investor loan book of the majors at $81.4 billion, down 1.7 per cent over the 12 months to 31 December 2016. ANZ was the only major bank to actually reduce the size of its investor loan book over the year.
Meanwhile, NAB’s investor book grew by only 4.3 per cent over the year to just over $100 billion, indicating the group still has plenty of scope to lend to property investors.
The bank has suggested that it has no immediate plan to pull back on investor lending, with Steve Kane, general manager, broker distribution at NAB stating last week: “We are absolutely committed to continuous improvement to ensure we offer a compelling proposition for brokers and their customers.
“NAB is open for business for both owner-occupier and investor borrowers, and is accepting all new business and refinances in line with our policies. We have not altered our policies, so business with NAB continues as usual.”
Westpac, which boasts the largest investor lending portfolio of the big four banks, grew its book by 5.1 per cent to $142.2 billion over the 12 months.
CBA has the highest rate of growth in its investor home loans. Its portfolio grew by 7.2 per cent to $137.3 billion over the 12 months to 31 December 2016.
Australia’s biggest bank recently informed brokers that, from today, it will not be accepting new investor refinance applications for home loans "until further notice".
The bank said that standalone investor refinance applications submitted prior to 13 February will be processed, subject to the bank's normal lending criteria.
However, CBA added that applications that include both investor and owner-occupier loans would not be impacted.
The bank commented: "Commonwealth Bank is committed to consistently delivering the best customer experience for home buyers, upholding the highest level of professional standards, and meeting our responsible lending and regulatory obligations.”
CBA’s decision follows a similar announcement made by its subsidiary Bankwest last week.
Similarly, AMP has suggested that it may “adjust" its approach to investor refinancing based on what the market does.
Craig Meller, AMP CEO said: “We made some moves a week or so ago and if you look at the background to those actions the macroprudential regulations that are being placed upon the industry are essentially putting a speed limit on the amount of growth on investor loans for the banking industry as a whole can achieve.
“When large players take action to slow their book, unless AMP bank takes action accordingly it could blow our business up with very significant increases in volumes so as we see the market environment changing so we'll be adjusting our approach in response to what we're seeing in the marketplace more generally.”
The bank's recent financial report revealed that owner-occupied loans made up 74 per cent of the mortgage portfolio at 31 December 2016, while investment property loans made up 26 per cent.
It concluded: “Management continues to target total lending growth at or above system, subject to regulatory growth caps, return on equity hurdles and funding availability.”
AMP Capital chief economist Shane Oliver has repeatedly speculated the prudential regulator will announce further lending curbs.
“The focus around APRA tightening its macroprudential measures in order to slow investor activity in the Sydney and Melbourne markets, in order to provide the RBA with ongoing necessary flexibility on interest rates, is likely to intensify,” he said.
“This could take the form of APRA lowering its threshold for the stock of lending to investors from the current level of 10 per cent year-on-year.
“We remain of the view that the RBA will cut interest rates again but not until May, but this is likely to require either some slowing in property price momentum or a further tightening in APRA’s macroprudential policies.”
[Related: Major bank halts investor refinancing]