APRA said it would and now it has – the regulator has cracked down on the investor market because it is concerned property values are in a bubble fit to burst. It will pour cold water on the market, for those who fall under its jurisdiction. But it might also give the non-banks a bit of a leg up, because they don’t. The Adviser went to find out more
APRA's focus on slowing growth in investor loans is another example of the changing mortgage market and the sorts of opportunities that the nonbank sector can benefit from.
“Individual non-bank lenders may be able to provide finance to investors who can no longer source finance from the banks, but this will depend on the source of the non-bank lender’s funding and their appetite for this segment of the market,” says Ray Hair, general manager for national sales at Homeloans.
Better Mortgage Management managing director Murray Cowan agrees, but cautions that it’s early days yet and so far there hasn’t been any major shift towards the non-banks. But once the banking sector has tightened its policies – which it will be compelled to do – things will start to improve for non-banks.
His estimate is it will take three to six months before investors begin to realise they are being short-changed.
“However, this may not last long term if non-bank’s lending books start getting too skewed towards investment loans, as they too will make changes to limit the volume of these loans,” Mr Cowan warns.
Royden D’Vaz, national manager for sales and marketing at Bluestone Mortgages has a slightly different take on the size of the opportunity or if there is one at all.
All non-ADIs are regulated by ASIC, he says, so aesthetically there will be no change.
“Anyway,” he says, “Bluestone’s credit policies and quality checks have always been strong, and will continue to be so irrespective of what’s happening with all other lenders – including the major banks.”
But La Trobe Financial’s Cory Bannister says APRA’s crackdown means it’s all systems go for the nonbank sector. Demand from consumers to fund investments
is unlikely to recede in the short term, he says.
And with banks tightening their investment lending policies Mr Bannister expects to see a shift ‘at the margin’ towards non-bank lenders.
“With increased investor activity, non-bank lenders have a great opportunity to showcase their superior service proposition and gain new customers,” he says.
Dolly Brtan, finance broker and founder of boutique finance broking firm Credit Corner, sees it the same way, calling the bank processes “very regimented”.
“On the other hand, nonbank lenders have various styles of doing business. The process is always driven by them. Some want to meet the borrower in person and others only want to deal with the broker.
“The process is unique, but non-banks tend to be more open to suggestions and negotiations,” says Ms Brtan.
On the same tack, Mr Hair says non-bank lenders are ideally placed to meet the borrowing needs of the whole market.
“As banks pull back from higher-leveraged first home buyers, investors and small business owners there will be opportunity for non-bank lenders,” he says.
It certainly seems as if the non-bank sector is well placed for an uptick in investor business right now, but then, according to Mr Cowan, it has always been ready.
“The sector has always had the products to cater for this space. They just haven’t typically got into a bidding war with the banks to try and capture more of the investor market,” he says.
Mortgage broker Gary Crocker agrees. He says nonbanks can often provide more alternatives under the one brand than a bank – especially during times of change.
“Such as now with investor loans,” he says, “non-banks are well positioned to meet the needs of borrowers who have effectively been turned away by the banks overnight.”
Perhaps, concedes Mr D’Vaz. Certainly in some cases nonbanks may be ideally placed for investor business, but in the main he says the industry will be well advised to resist getting carried away and maintain a B.A.U. approach.
“Business as usual” at Bluestone means assessing each and every deal on its own merits just as it always has done.
Mr Bannister says for La Trobe Financial it will be also be business as usual.
“Our raison d’etre is to service those borrowers who are underserved by the banks,” he says, “the same as it has been since we began 63 years ago.”