Changes / tightening on servicing for investors

Discussion in 'Property Finance' started by Marty McDonald, 8th May, 2015.

  1. Marty McDonald

    Marty McDonald Mortgage Broker Syd

    Joined:
    5th Oct, 2010
    Messages:
    1,443
    Location:
    Sydney (North)
    On a more constructive note anyone come up with any non banks with decent servicing besides Firstmac and ABL funded mortgage managers?
     
  2. jerrybee

    jerrybee Member

    Joined:
    1st Aug, 2013
    Messages:
    1,182
    Location:
    melbourne
    This is an important point. For anyone already at the limit, they might be tempted to think - I'll sell one to buy a better performing property (e.g. sell in Syd in 12 months, buy 3 in Bris for same price). Beware - that money may not be available to be "redeployed". In this case you'd rather have an OK performing property rather than none at all. It's like a game of musical chairs, only you're guaranteed to lose your chair.
     
    Last edited: 15th Jun, 2015
  3. Jamie M

    Jamie M Mortgage Broker - Oz Wide

    Joined:
    20th Jul, 2009
    Messages:
    4,085
    Location:
    Canberra and Sydney
    I hope Nab's changes stick and they don't implement further servicing changes. The 28% loading isn't too bad (relatively speaking) - the extra supporting docs is a pain though.
     
  4. Jess Peletier

    Jess Peletier Mortgage Broker, Perth

    Joined:
    23rd Apr, 2014
    Messages:
    518
    Location:
    Perth WA
    P&N are good for servicing, especially if you're buying under 80% lvr. They don't have dua, and they only like WA borrowers, but if you have ties to WA they might consider. And a WA broker is not a good enough tie. I know because I asked ;)
     
  5. euro73

    euro73 Member

    Joined:
    13th Oct, 2009
    Messages:
    795
    Location:
    Sydney, NSW
    STG to add 2.25% to your actual rate - effective June 22

    Adelaide to add 2.25% to your actual rate - effective July 4.
     
  6. Peter_Tersteeg

    Peter_Tersteeg Finance broker/strategist

    Joined:
    29th May, 2001
    Messages:
    8,506
    Media:
    1
    Location:
    Melbourne
    Attended a function this today and spoke with about 15 different lenders. There are still lenders that will take actual repayments and have very strong servicing models. A few are even outside of APRAs oversight (that's what they tell me).

    The catch is of course, the price you'll pay via higher rates and fees.
     
  7. Redom

    Redom Mortgage Broker

    Joined:
    1st Jul, 2014
    Messages:
    1,324
    Location:
    Sydney (West) and Canberra
    Yep, one of the indirect consequences of targeting the main banking sector is that it will see investor lending move towards the 'shadow' banking sector. They'll see a big spike in their investment business i think as deals get pushed to them that'd previously had gone to Macq, NAB, Adelaide, AMP.

    They do remain outside APRAs scope, which i think provides a window of opportunity for investors to continue this further. It will take a while for them to come in view. APRA relies on a system of collecting data and their systems may not be in place to capture data from the shadow sector as accurately as required from ADIs. In any case (if these lenders are asked), there'll be months in terms of lag time before data is reported.

    On the other hand, i'm sure those policy experts would know that this intervention would do this and perhaps they've been proactive (regulators being proactive? Crazy!) and set up systems to have some level of oversight.

    In Australia the shadow sector has typically been very small as a portion of the lending market. It has been as they've only been able to get business with to niches that the major players wouldn't fill. Now with these serviceability tightening on investors, they have a much bigger 'niche' to fill.

    For those that it affects most, i think their the least price responsive (sophisticated investors with large mortgage holdings) and may be willing to be a bit more in fees to get deals over the line.

    Cheers,
    Redom
     
  8. jerrybee

    jerrybee Member

    Joined:
    1st Aug, 2013
    Messages:
    1,182
    Location:
    melbourne
    Ah, so this is what shadow banking is. I always thought it was a nice way to refer to loan sharks. So basically it's the smaller lenders?

    Ok question - other than the higher rates and fees, are they as inherently safe as the larger banks? Would one have to worry about predatory behavior? Do you need to proceed with extreme caution or are they pretty much as safe as the big guys?
     
  9. Redom

    Redom Mortgage Broker

    Joined:
    1st Jul, 2014
    Messages:
    1,324
    Location:
    Sydney (West) and Canberra
    Haha well in policymaking terms we used the term to mean banks that aren't under the same oversight levels as the main banks that are prudentially regulated.

    Loan sharks do fall into that bucket.

    In terms of higher rates, it should be noted the rates are still very much residential rates. Given the size of the lenders these residential rates aren't too shabby and can compete with the bigger players.

    The one that i've used so far has a variable rate starting at <4.25%. The difference is that valuations have fees paid by client, so the upfront cost is a bit more - but the rate is sharp.

    Cheers,
    Redom
     
  10. Shahin_Afarin

    Shahin_Afarin Finance Broker

    Joined:
    6th Feb, 2012
    Messages:
    2,433
    Location:
    Sydney, NSW
    RAMS is quite good.
     
  11. Rolf Latham

    Rolf Latham Member

    Joined:
    2nd Mar, 2001
    Messages:
    18,791
    Location:
    Confused = Sydney, Brisbane and Gold Coast
    For about another 20 days.......


    Ta
    Rolf
     
  12. sash

    sash Member

    Joined:
    10th Feb, 2003
    Messages:
    3,581
    Location:
    North Shore, Sydney
    Here is a question....I know Westpac have changed criteria...but have St George changed yet...they are owned by WBC but are a separate business entity....
     
  13. jerrybee

    jerrybee Member

    Joined:
    1st Aug, 2013
    Messages:
    1,182
    Location:
    melbourne
    Ok thanks. What about dodgy practices / risk? Obviously I'm referring to the smaller players and not the loan sharks. Do they have predatory practices and lots of surprises and catches? Or are they generally ok?
     
  14. euro73

    euro73 Member

    Joined:
    13th Oct, 2009
    Messages:
    795
    Location:
    Sydney, NSW
    Just announced they are adding 2.25% buffer to their assessment of OFI debt.
    They haven't removed neg gearing though, which WBC did
     
  15. sash

    sash Member

    Joined:
    10th Feb, 2003
    Messages:
    3,581
    Location:
    North Shore, Sydney
    Ta...I should qualify again then.....

     
  16. Rolf Latham

    Rolf Latham Member

    Joined:
    2nd Mar, 2001
    Messages:
    18,791
    Location:
    Confused = Sydney, Brisbane and Gold Coast
    meaning ?

    please expand on your view of that

    ta
    rolf
     
  17. Peter_Tersteeg

    Peter_Tersteeg Finance broker/strategist

    Joined:
    29th May, 2001
    Messages:
    8,506
    Media:
    1
    Location:
    Melbourne
    I'm not really talking about private funders catering to sophisticated investors borrowing millions. There are plenty of well established lenders out there catering to the fringes of the market but with funding sources that are outside APRA. Brokers just need to get to understand a broader landscape of lenders.

    I believe that all first and second tier lenders will come under the ongoing reviews sooner or later. Today I also spoke with a couple of credit unions that already have fairly conservative policies and are generally off the investment radar. They're getting the knock on the door as well.
     
  18. JohnHenry

    JohnHenry Mister

    Joined:
    3rd Jun, 2011
    Messages:
    721
    Location:
    Wollongong
  19. Peter_Tersteeg

    Peter_Tersteeg Finance broker/strategist

    Joined:
    29th May, 2001
    Messages:
    8,506
    Media:
    1
    Location:
    Melbourne
    JohnHenry the BankWest change occurred and was discussed on this threat weeks ago.

    Most lenders have adjusted their LVR policy, but most are still allowing you to borrow up to 90% of the property value. Unless you were relying on BankWest for finance (it's hard to think of why you'd do that), the LVR change haven't been worth worrying about so far.
     
  20. JohnHenry

    JohnHenry Mister

    Joined:
    3rd Jun, 2011
    Messages:
    721
    Location:
    Wollongong
    Ah I see.

    Thanks Peter.:D