CBA says its OK to sing I owe I owe, but no more IO on > 80 % is my woe

you will get much further with westpac. till recently yhey also offered 15 years io upfront

when you are carrying 7 to 9 mil in loans cba is not a good fit

 

Because?

No clarity on your bias comment?

Who is a good fit for investors with that sort of debt? Has it always been them? Or does it change?

 

at 80%LVR means instead of buying 1m property with 100k deposit (@90%LVR), buyers can only get loans for 500k properties with 100k deposit all of a sudden?(even if serviceability for 1m is ok?)

Will property prices adjusts accordingly?
Will the LVR changes finally put a damper on property markets in Syd/melbs?

Seems to be quite a fast deleveraging by the banks the way things are going.

 

Interesting views sash.

Adding some colour to the debate - from a credit policy perspective, the countries two largest institutions compete closely with each other.

Re pricing, CBA's rates and Westpac's are usually on par with each other. Neither have a competitive advantage here and don't really focus on being the cheapest.
I/O term lengths will be brought down with industry.
Investment lending slowdowns, again industry impacts.
I wouldn't really be citing these as examples when comparing the two - they both are massive institutions and operate in the same environment.

So for property investors theres a few takeouts worth noting:

• Speed: Westpac better here, i think most brokers will agree. They've won best bank awards voted by brokers years running for a reason, CBA closely behind.
• Product & package: CBA allow multiple offsets per loan (great for customers), easier splitting. Westpac are also quite premium here too though relative to the broader market as a whole.
• Process/Bank end: Different brokers will say different things here. I find both better than most really.
• Verification & assessment: Westpac far better and makes life easier. CBA were good here but have made some major changes to improve credit quality. I'm not sure how long Westpac can last with this though, hopefully it remains (given they've got a court battle with ASIC going on about this type of behaviour).
• Technology: CBA win here hands down. I don't think Westpac compete very well here, there's quite a few better than them.
• Customer service: This has long been CBA's point of advantage. From a personal banking perspective, CBA win hands down overall. But it is very branch dependent and who you speak to. The quality of talent may be on par, but the level of focus on 'customer satisfaction' is a bit different. Hence the outcome difference between the two on this metric.

Credit policy wise - some of CBA's niches really do make them stand out here IMO, particularly for property investors. For example, accessing equity is as much about policy as it is access to valuations - CBA are the best here. This makes equity pulls rather unique with them (good policy, great valuation, no real limitations). They'll both be subject to policy changes here. Generally speaking, they are both 'premium' re credit policy and both very good for investors, especially compared to the rest of the market.

Broadly, i'd suggest most property investors have access to all the tools with both the big banks - both great places to begin investing with and grow portfolios over time. Westpac currently have a servicing niche, which does lend weight to having them used a bit later, but this is a merry go around and that will very much change over time.

If we add ANZ and NAB to this type of analysis, both have their plus points and niche's that are great, but do fall over a bit when it comes to property investors relative to CBA/Westpac. E.g. ANZ package is frustrating (one offset in total). NAB's equity pulls are a bit more restrictive.

Perhaps there's tones of bias in the above, its hard for me to say. I'm a big user of both and have the bells and whistles treatment that they offer brokers (pink diamond & platinum). The above is my objective view of it. As of right now, Westpac are winning because their offering faster timeframes & better pricing. But i've been in this long enough to know that CBA will be back at the table soon enough - this time last year it was CBA.

 

This is true, for now, but its largely in relation to current servicing calculators than anything else.

As a rough guide, Westpac will lend property investors 100-120k more per $1mill of debt relative to CBA. They do have a rental reliance stop gap though.

Re this type of serviceability difference, it will change. Treatment of existing debts is probably a bit too loose for APRA's liking.

Westpacs 15 year I/O assessment and verifications has landed them in court...it was great definitely, but they've since bumped up rates aggressively (SVR) on these loans and encouraged customers to move to P&I with sharp rates. I'm not sure you can point fingers at CBA while using Westpac as an example.

 

I am not saying Westpac will not change...as a matter of fact they will go te other way next month....

CBA however..is consistently.....at the edge ....look at who runs each bank...Westpac is run by traditional Retail Bankers.....CBA.....by ex Management Consultants...very different cultures...the later passes risk to the customers...

 

If you mean having clients with CBA loans then yes I am a guilty of having a vested interest. Just like I am with clients currently with 12 other lenders.

Your dislike of CBA seems an emotional response rather than rational to me so I'm calling you out on it.

 

Marty....lets put it this way.........when you get to a certain size in loans...there is not way you would do business with CBA.

I am calling it the way I see it......not emotional...I just don't like doing busines s with people who are not flexible.

I'll let you put the amateurs into the CBA...but the Big boys have moved well past them.....watch what happens over the next few months with CBA.

As a matter of fact...I have been recommending people refinance away from the CBA ASAP!

 

CBA are a lender that I actively avoid. I think I have only put abotu 10 loans to them. I see no point as the clients are usually better off with other lenders.

 

When you say "certain size in loans" what you really mean is large loan amounts with a stretched income to loan ratio (in their model of course which is their prerogative)? I'm sure CBA would be fine lending to some other borrowers with your level of debt who have a different profile to you....maybe more income from employment and lower LVR.

Lets agree to disagree.

 

NAB have joined the 80% LVR club

 

My perdition is within 6 months interest only loans will be capped at 70% LVR with many lenders.

 

perdition
pəˈdɪʃ(ə)n/
noun
noun: perdition

1. (in Christian theology) a state of eternal punishment and damnation into which a sinful and unrepentant person passes after death.
   synonyms: damnation, eternal punishment; More
   hell, hellfire, spiritual destruction, doom, ruin, ruination, condemnation, destruction, downfall
   • complete and utter ruin.
     "she used her last banknote to buy herself a square meal before perdition"

Origin

late Middle English: from Old French perdiciun, from ecclesiastical Latin perditio(n- ), from Latin perdere ‘destroy’, from per- ‘completely, to destruction’ + the base of dare ‘put’.


Hope you meant "prediction" ......

Otherwise, perhaps investor perdition is ..... a state of eternal ( or what seems like eternal ) punishment and damnation into which unrepentant cash flow snobs pass after I/O terms revert to P&I.

 

I was under the impression WBC only offer 1 offset per loan?

 

They do. Overall Westpac's product/package is pretty sharp for investors. CBA offer multiple (great), Westpac one per loan (good), ANZ one per package (annoying).

 

It's not difficult to get a second offset account with ANZ if you ask.

 

But you have to pay for it $10/month

 

Again not difficult to get it waived if you ask.

 

Have a possible conundrum coming up for one of my IPs.

I can either go with interest only @ 4.5% or P&I @3.9%.

With a small/zero disparity, it's a no brainer ie interest only wins hands down. But am thinking in this case, perhaps P&I is the wiser option.

Any thoughts?