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Who are the lenders not affected by APRA changes?

Discussion in 'Property Finance' started by Magnet, 7th May, 2016.

  1. Magnet

    Magnet Well-Known Member

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    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?
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    liberty and pepper to some degree

    what you would be looking for is a lender that isnt a bank CU or mutual, orfunded by the preceding
    so pretty much any lender that is funded by offshore$

    AUD denominated and secured mortgages are regarded as a High return relative to low to moderate risk by offshore money .

    I call that we will see a ?x increased volume of that source of funding


    ta
    rolf
     
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  4. Magnet

    Magnet Well-Known Member

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    I've heard a lot of talk about Pepper lately. Are they an international lender setting up shop in OZ?
     
  5. kr11

    kr11 Well-Known Member

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    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
     
  6. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    traditionally a lender for those with credit history issues - or those with odd securities,ie someone that could not fit mainstream banks.

    Their target is still that in my view - those investors that have been sidelined who have had their plans fully derailed by the nearer "standardisation" of lending practices across lenders as a result of APRA guidance.

    APRA has a noble job to do in protecting the system for the "greater good"........... but as at this date, they cant regulate lenders or $ sources that dont fall under their jurisdiction.

    For lenders like Pepper et al, they obviously see the current trends as a HUGE opportunity, and Id have to agree.

    Having said that, I expect there is some regulatory risk here for such lenders,while not from APRA, perhaps from other areas of gov that have a concern that borrowers are exposed to "too much rope"

    Make hay while the sun shines

    At the moment we have an increasing number of clients with longer term settlements (mainly in the OTP space) that are in a spot of bother due to the APRA pressure, While the capital values tend to still hold above what they purchased for, as markets soften...............and those borrowers cant on sell there will be some unintended collateral damage to everyday mums and dads.

    For many in that position, I expect that acting now to onsell to buyers that can complete is a prudent but expensive lesson.

    This time "she will be right" possibly wont apply

    ta

    rolf
     
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  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    I will leave the Pepper question to someone else,I dont have a good enough relationship there to see what the future may hold.


    Liberty as at this date have NOT advised such a move,and with their budgets for next year set significantly above current, and having geared up and set their staffing and systems for growth I dont expect that to happen just yet.

    ta
    rolf
     
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  8. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    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.
     
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  9. Magnet

    Magnet Well-Known Member

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    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.
     
  10. kr11

    kr11 Well-Known Member

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    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
     
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  11. kr11

    kr11 Well-Known Member

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    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
     
  12. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    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.
     
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  13. Barny

    Barny Well-Known Member

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    Hi Peter, does Liberty allow you to lock in rates for a period of 1-5years or only variable?
     
  14. euro73

    euro73 Well-Known Member Business Member

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    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%...
     
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  15. euro73

    euro73 Well-Known Member Business Member

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    MUCH better servicing than those lenders, below 80%
     
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  16. Richard Taylor

    Richard Taylor Mortgage Broker & Brisbane Buyers Agent

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    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
     
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  17. kr11

    kr11 Well-Known Member

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    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
     
  18. Wall Street

    Wall Street Well-Known Member

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    Cash converters...
     
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  19. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    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.
     
  20. kr11

    kr11 Well-Known Member

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