Who are the lenders not affected by APRA changes?

I saw someone make an off hand comment about some lenders still not affected by APRA changes. I assume this is in reference to non-bank lenders. Can any of the brokers give a run down on these lenders and a bit of a list of names?

 

Mostly commercial lending as opposed to residential lending. That may change in the future though.

 

I've heard a lot of talk about Pepper lately. Are they an international lender setting up shop in OZ?

 

Hi rolf
I was told that after apra involvement
liberty have changed their treatment of ofi debt from actuals to a high buffered rate
pepper have changed their treatment of ofi debt from actuals to a 20%loading on ofi

is that true?

thanks

 

If you're looking to find a bit of additional serviceability, Pepper isn't the answer. Like Rolf I'm not 100% certain what their policy is today, but I do know that their servicing isn't as generous as many more mainstream lenders. Serviceability isn't Peppers niche.

Liberty still uses actual OFI repayments, their serviceability is quite strong. That said, it's not quite as strong as some lenders were a year ago and there are other restrictions. They're probably good for one last deal, not for another 3 or 4 deals. Also don't even dream of going above 80% with them as then they're subject to LMI criteria which doesn't service as well.

There are plenty of smaller credit unions and mutuals which haven't been affected by APRA, but there's no answers there as they already have policies which are well in line with APRA requirements.

 

More an out of interest question rather than a lending question. Just interested to know who is and isn't affected by APRA to get a better understanding of the current lending environment big picture.

 

I am sure the brokers can clarify this, but to my understanding any deposit taking institution such as banks, credit unions etc are affected by apra
Initially it was the big4+macquarie but it spread to the others
Non deposit taking institutions are the ones that are not affected by apra but some might or might not have changed their policies. they are answerable to asic rather than apra

 

Hi Peter. If u wouldn't mind, could i ask u
What were the restrictions with liberty?
Why would they be good for only 1 last deal, instead of more?
Would u consider them more generous in servicibility overall than nab or rams, and someone u could use after nab and rams
thanks

 

I could be wrong, but I think only institutions above a certain size are directly under APRA oversight. This would mean that a small credit union might not be subject to their regulation.

For starters, Liberty has restrictions on how much they'll lend to any individual or group. They'll lend enough for one or two properties, possibly 3. Unless you're looking at the bottom end of the market, they'll cut you off eventually.

They are more generous than any other lender I'm aware of, including NAB and RAMS.

I also consider them a high risk lender. I don't think they're about to go broke themselves, but given their funding sources are well outside the norm, if markets start to go bad, their rates could increase very quickly. Non conforming lenders got very nasty during the GFC.

 

Hi Peter, does Liberty allow you to lock in rates for a period of 1-5years or only variable?

 

Liberty assesses two ways.

Below 80% LVR, the new money is assessed at 2% above the rate you are getting. ie 4.4% is assessed at 6.4% . Existing debt is assessed at "actual"

Above 80% , the new money is assessed at 2% above the rate you are getting. ie 4.4% is assessed at 6.4% . Existing debt is assessed at "actual" + 2.56% buffering.


Pepper assesses OFI debt at 20% buffer. eg If you are paying 4% they would consider it 4.8%. They get expensive above 80% LVR, but if thats where you service, thats where you service


So Liberty is stronger than Pepper to 80%, then reverse that above 80% LVR

There is another lender with "actuals" to 90%...

 

MUCH better servicing than those lenders, below 80%

 

Even though they are APRA regulated Advantedge still service at OFI actual rate + 30% buffer so if you have a number of low fixed rate loans elsewhere it works out well.

They are also still using their own Living Expense scale based on family size rather the NAB adopted scale based on Gross incomes.

Cheers


Richard

 

thanks euro for your detailed explanations, as usual

would u mind sharing who that lender is that does 90% and ofi at actuals if possible?
thanks

 

Cash converters...

 

Advantedge products actually received the same scaled living expenses (HEM) as NAB when the change rolled out back in January.

The buffer calculation certainly is great however, we use them as a lender often - alongside their generally favourable policy set for investors.

 

Is there max exposure about 1.5mill like most other banks
I hear they dont like units. is that true
thanks