The dodgiest of dodgy banks is writing its own rules… but property investors might be better off.
Ok, this sure looks dodgy. And to be honest, I don’t even know what story the banks are telling to make it look legit.
I don’t even think they bother anymore.
Ok, so remember in 2014 APRA came in and said that it wanted the banks to slow down lending to property investors. They put in a cap of 10% pa. That was as fast as they wanted investor lending to grow.
And the banks all towed the line, and it was the start of a range of credit tightening measures, most of which are still intact and have given us some of the tightest credit conditions since the GFC.
That was yesterday. Today, we’re waking up to a looser credit environment, as APRA starts giving banks relief from the cap on an ad hoc basis.
From Banking Day:
The volume gains made by non-ADI lenders in the investment mortgage market could come under severe pressure in the next few months as APRA begins to loosen the prudential constraints on lending to investment borrowers.
Banking Day can confirm that HSBC Australia, Macquarie and People’s Choice Credit Union are among the first ADIs to secure relief from the cap on investment lending introduced by the regulator four years ago.
In April, APRA signalled its intention to remove the restriction on a case-by-case basis, with licensed ADIs required to demonstrate that their serviceability tests and assessment criteria met new standards set incrementally by the regulator over the last three years.
Since 2014 APRA has required all ADIs to keep monthly growth in investment lending below ten per cent.
Banking Day understands that none of the four major banks have sought relief from the cap amid concerns that their lending practices were not likely to meet responsible lending requirements.
So that’s good news for investors. It has been tougher to get loans across the line lately. A little relaxation is a welcome thing.
But it’s also kind of strange, isn’t it? Why are they giving individual banks ad hoc relief? Do they care where the money is coming from? Shouldn’t they be worried about the ‘system’ overall?
I mean, that’s their mandate, right?
So it’s odd that they’re not relaxing the speed limit across the board.
But it gets dodgier. Take a look at that list that’s getting relief: HSBC Australia, Macquarie and People’s Choice Credit Union.
Now take a look at investor mortgage credit growth in our largest lending institutions:
Yep, that grey line is MCG – Macquarie bank – busting through the lending cap with gay abandon
… in June.
Just to be clear, let me lay out the timing again. Macquarie banks busts through the lending cap in June, to effectively be clocked doing two and half times the speed limit.
APRA responds, not by slapping Macquarie on the wrists, but by granting them an ad hoc exemption to the rules… in August.
(Seriously. I’m not making this up.)
Macquarie is in a class of its own.
Remember the GFC, when the government announced a deposit guarantee to protect customers of the big four… and Macquarie?
Macquarie had a tiny depositer base at the time. It was still effectively an investment bank, and yet it secured a deposit guarantee and a massive free kick from the government.
And here we are ten years later, with Macquarie effectively setting its own speed limits.
While a Royal Commission into dodgy banks is actually still sitting!!!
Yup. It’s like they’re not even trying anymore.