AMP Bank pulls out of all investment lending

As a reaction to the tightening lending market AMP Bank are about to announce later in the day a total withdrawal from the investment loan market.

This includes standard investment loans and loans to Self Managed Super Funds (Of which which they were amongst the leaders in this sphere).

Interest rate rates for existing clients will increase by 1% and loans approved but not yet settled (including fixed rates) will also increase by the same amount.

Certainly getting interesting in the investment loan market.

 

Bloody hell. Pretty **** of them to increase the existing loans by 1% too, I suspect a fair few people will want to move but can't due to recent APRA changes. Especially if amp were chosen due to favorable calcs for jointly owned IPs, I know I've used them in the past for this reason.

Reminds me a bit of Macquarie jacking up their rates significantly when they decided to exist the mortgage space during gfc, I think we copped a 10k break fee to get out of that one

 

Exciting times!

 

WOW. That's huge. Given their niches, (previously generous servicing, and as Sanj said jointly owned niche) this could be quite expensive for some investors. There are still options to exit though, if servicing was the reason for using them.

 

Wow, Shahin mentioned their exit late last week.

I didn't think they'd smack a 1% increase on either existing base.

Thats telling people either:
1. More rate hikes are to come from others; or
2. Refinance please.

Cheers,
Redom

 

'Exciting' isn't the word I'd use to describe this announcement. The LMI paid by investors with this lender is now useless.

Likewise rate increases to shunt people on is a kick in the teeth.

 

It's pretty smart actually. At 1% I suspect a lot of people will have to suck it up, too hard basket to refinance. Immediately their margins are through the roof and the books are the looking better.

With Macquarie I think they ended up being nearly 3% higher than the rest of the market for their no doc loans so mist people bit the bullet and refinanced

 

AKA love the investor loans while it rakes them in tonnes of profit, but happily screw them all over when it no longer suits them.

People (and brokers) have a long memory, and should AMP return to investment lending it wont be a rush back to them.

 

the problem is a lot of people at AMP couldnt get finance anywhere else due to a few of their niche policies or servicing calculator was pretty high end.

 

In certain circumstances sure you are limited to using one lender but the likes of Firstmac and Homeloans were still around so there were options but a lot of brokers weren't/aren't using these lenders.

Thats not to say the these and other lenders will not follow suit.

 

Luckily I've already refinanced 600k from them and am already in the process of moving another 500k. Would expect anyone who can refinance to do so.

 

You're right in that from a reputation in market pov it's not great but I do think people get a bit too sensitive about these things.

Both banks and us on the other side are looking out for our commercial interests, we happily change lenders or call them up to get them to lower rates and the threat of a refinance etc. What they're doing really is in the same spectrum, just a commercial decision and I don't think 1% is that excessive in the big scheme of things

 

From my discussions with AMP today - they very much didn't want to do this but hand has been forced - they have a deadline to reconcile their figures by end of 31 dec, whereas the other lenders have until June 30.

Their expectation is that can reshuffle their figures and be able to re-enter this market by October, we'll see what happens.

 

I have a loan with them! I just got them down to 4.15% too

 

Really? For some people that is a 25% increase in their current rate.

I think anyone who has financed with them in the last 6 months should have some claim for refinance costs and LMI refund. However, I am sure they are not contractually entitled to do this.

Almost a form of 'bait advertising'. Get you in at a good rate then dramatically increase the costs.

 

In the context of a lender exiting a sector and essentially wanting u to refinance away 1%
Isn't too bad imo. Imagine if they had done 2 or 3% and you couldn't refinance, that would really suck

 

I agree from AMP's perspective it may be all good.

But imagine you just refinance with them 1 month ago at 4.15%, paid LMI of nearly $10k. You selected them based on their somewhat competitive rate (we all know this is subject to change).

I dont think it is fair for the borrower to foot the bill for their change in business circumstances.

 

Look I've got an amp loan myself and I've used the.the . extensively in the past. I'm actually negatively affected by this. Ultimately though it's all in the game right? We show banks no loyalty nut expect it back from them?

 

Agree MRO but as the Banks are offering a "service" the user always pays especially in this current climate.

The question I keep asking myself is why didn't APRA step in earlier and impose changes etc

It seems to me the banks have used APRAs recommendations make mountain out of a mole hill..

 

I just think it's a bit of a shame that the APRA changes aren't more targeted. Realistically because of one city, admittedly our biggest and most influential one, and melbourne to a smaller extent the entire country has to contend with these new rules

Why not just make it applicable in say sydney if the purpose is to slow down the investor frenzy?