Westpac cuts investor loan discounts

Westpac cuts investor loan discounts

The SMH article reports that Westpac has joined ANZ, CBA and NAB in reducing the incentives for property investors. The regulators and APRA in particular have made it clear over the last 6 months that they consider growth in investment loans over 10%pa as a risk to the financial system.

Westpac – whose investor lending grew 11.5 per cent in the year ended March – is the most exposed to property investor lending of the major banks and is strong in NSW via its St George Bank subsidiary.The changes will apply to Westpac and all of the brands it owns, including St George, Bank of Melbourne and BankSA.

It is evident now that APRA is taking the measures they see necessary to reduce the growth in property investment loans to below 10%pa.

APRA grew more restless when Reserve Bank of Australia data released on the last day of April showed the banks expanded loans for property investments in the year ended March 31 by 10.4 per cent – the highest rate since 2008 and above APRA’s limit.

Even with these changes by the major banks it is still possible to get investment loans at rates below 5%. Whether these measures taken will reduce growth to a level acceptable by APRA or if additional measure will be required by APRA time will tell.