If you were a lender post apra

So if you were a lender and had to play by the new rules ie 7.5-8% p&i on all existing and new debts and increased minimum living expenses how do you tweak things to get more business?

I ask because i believe it will happen in February / March next year now that investment lending is falling off a cliff. Officially down 8.5% last month seasonally adjusted. I'm just not sure I know how the "engineers" will do it.

Levers
* price
* policy ie LVR
* servicing ??

 

I think we might see a lot more cash back, points, overseas trips.etc used to try and win refinance business.
As for new investment business then given most here are saying no to serviceability changes I would have to guess LVR (no LMI 85% type deals) and better cash out policies.

Ofcourse I have no idea though, just throwing it out there

 

Great question Marty - i think that number may include the reclassifications that are going on.

Pricing i suspect will be the first thing to come down and equalise over time i believe. This is pretty poor policy and comes at a cost without much of a benefit if the markets slowed. It may be viewed as unnecessary.

Not sure we'll see so much policy changes back in favour - perhaps little tweaks.

 

You under-report your investor loans by $50Bn. You say you think you are including FHB figures as investor loans too, and you'll get back to them in due course with some updated figures.

I'm still struggling to believe this actually happened.

 

Thanks Alan... well, your answer following on from Redom has just demonstrated a whole other way of interpreting the question posed which I wasn't expecting...

 

I doubt we'll see price changes, and with OFI and living costs locked in I doubt we can see serviceability changes from the out column.

What about serviceability changes from the in column? Ie increasing the cap on rent or the percentage of rent accepted? Or judging bonuses, overtime or 2nd jobs better?

They could also look at policy changes like top up purpose, quantity of property, positive/negative gearing add-ons, etc

Being positively geared and using multiple entities in conjunction with a 5 star broker has greatly lengthened my chain so I'm happy if others can't borrow. Ill take all the houses

 

No speculation is really needed for this question, many lenders have made it clear what sort of business they want and there's plenty of offers around to win those types of business.

Most lenders are hungry for owner occupied principal and interest loans. The first thing lenders did a few months ago was drop rates for these types of loans, there's currently differences of up to 0.9% between this preferred lending and investment lending in a few cases.

There's also been cash-back offers for new business and frequent flyer point bonus'.

There could be policy changes, but these tend to be subtle and are generally implemented as a deterrent for non-preferred business, rather an an incentive for preferred business types.

Servicing changes are constantly being adjusted, but there's not going to be any significant changes here. Whilst all types of lending are affected by the recent servicing policy changes, the affect been minimal for those with only owner occupied debt.

 

Does anyone know if they have a state by state breakdown of those figures .

I find it quite easy to believe that much of the drop occured in Sydney and to a lesser extent Melbourne .

Cliff

 

I could... but maybe work secret!!

 

http://www.abs.gov.au/AUSSTATS/[email protected]/Lookup/5671.0Main+Features1Sep 2015?OpenDocument

You need to look at the commercial finance figures- as thats where the resi INV lending figures sit. Investment housing lending was down from $13.2 Billion in August to $12.9 Billion in September.