AMP halts hous­ing in­vest­ment lend­ing

Townsville Bulletin - - NEWS -

AMP Bank has stopped lend­ing to in­vestors as mort­gage bro­kers warn in­ter­est rate hikes for land­lords could lock out first- time buy­ers but lead to fur­ther dis­counts for owner oc­cu­piers.

AMP Bank has hiked rates on ex­ist­ing loans to land­lords by 47 ba­sis points, the big­gest and latest lift by a len­der as the in­dus­try moves to ar­rest growth in in­vest­ment lend­ing.

But un­like other lenders AMP Bank has de­cided to tem­po­rar­ily cease loans to new prop­erty in­vestors in re­sponse to reg­u­la­tor con­cerns.

It will not take any new in­vestor prop­erty loans un­til later in 2015, depend­ing on mar­ket con­di­tions.

“We ap­pre­ci­ate the po­si­tion this puts our cus­tomers in and will be work­ing with our dis­tri­bu­tion net­work to ac­tively com­mu­ni­cate with them,” AMP Bank man­ag­ing di­rec­tor Michael Lawrence said.

“Aus­tralia’s prop­erty mar­ket is ex­pe­ri­enc­ing high lev­els of in­vestor prop­erty lend­ing growth and we are sup­port­ive of the reg­u­la­tor’s in­ten­tion to slow this growth to ap­pro­pri­ate lev­els.”

Mort­gage bro­ker Mort­gage Choice CEO John Flavell ex­pected in­vestors to pass on the ad­di­tional costs from higher rates to ten­ants, which would make it harder for the large pro­por­tion of renters who are as­pir­ing to own their own prop­erty.

“Ten­ants will feel the brunt in higher rents, the ten­ants that were look­ing to use in­vest­ment bor­row­ing as a mech­a­nism into the mar­ket can’t get ac­cess to credit and the cost of that credit has gone up,” Mr Flavell said.

AMP Bank joins three of the four ma­jor banks, plus Mac­quarie, in lift­ing rates for in­vestors af­ter the Aus­tralian Pru­den­tial Reg­u­la­tion Au­thor­ity set a “speed limit” re­strict­ing growth in in­vestor lend­ing to 10 per cent a year.

AMP Bank, a small player in Aus­tralia’s home loan mar­ket, plus ANZ and Com­mon­wealth Bank have cut rates on some owner oc­cu­pied loans.

Mr Flavell said fur­ther dis­counts for owner oc­cu­piers were pos­si­ble.

“If lend­ing in­sti­tu­tions are fo­cused on grow­ing their mort­gage foot­ings and their abil­ity to grow in the in­vest­ment space is capped then they’ll look for op­por­tu­nity in the owner- oc­cu­pied space and I’d ex­pect that the com­pe­ti­tion will heat up,” he said.

West­pac was the only ma­jor bank that had not yet hiked rates for prop­erty in­vestors but faced the prob­lem that its sys­tems pre­vented it from in­creas­ing the stan­dard vari­able in­ter­est rate for in­vest­ment loans with­out also im­pact­ing owner oc­cu­piers.

“Our rates re­main un­der re­view,” a West­pac spokesper­son said.

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