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Stricter Lending Standards by Banks Seems Profitable for Non-Banking Lenders

May 26, 2015

As per the Australian Prudential Regulation Authority’s (APRA) pressure on banks for the tighter lending standards, the banks have started following the same. But it has come to notice that by this decision banks are losing the borrowers as there are getting more attracted towards non-banking lenders that don’t have as strict lending standards as the banks are.

Mozo home loan expert Steve Jovcevski said, “Non-bank lenders are likely to reap the rewards of investors being turned away by the big banks, which are now demanding higher deposit amounts and getting rid of discretionary discounts”.

Data collected from Mozo is showing a rise in investor financing by 54 per cent in 2 years which is a double of the figure of owner occupier finance i.e. 27% in the last two years.

Some investors are having applications rejected, resulting in a flurry of panicked refinancers flooding the market, especially those settling on properties as early as this week,” said Steve Jovcevski.

According to Mozos’s survey there are a total of 48 non-bank Australian lenders that are not following the standards as APRA wants. The survey also revealed the top 5 lenders that are attracting higher no. of investors in the country.

Here is the list:

  • Homestar, with a rate of 3.98% with a maximum LVR of 95%
  • with 3.98%, with 90% LVR
  • iMortgage comes in third at 4.04% with LVR of 90%
  • Newcastle Permanent have the rate of 4.09% with 80% LVR
  • State Custodians also have the rate of 4.09% with 80% LVR.

Not being strictly regulated by APRA doesn’t mean it will be a walk in the park, these lenders will still be cautious as a result of the actions of the majors,” said Jovcevski.

News Source:

More than $75 million AUD
disbursed in loans!