Major bank
Westpac has reported a slight increase in mortgage risks during the third quarter in its latest trading update.
Ninety plus day delinquencies rose two basis points to 0.69% as of 30 June 2017 – a slight uptick which the bank said was mostly due to the impact of Severe Tropical Cyclone Debbie in March and April this year.
More broadly however, Westpac’s volumes of 30+ day delinquencies actually dropped one basis point to 1.38% between the March and June quarters.
Current variable mortgage interest rates at Westpac are now 5.24% p.a. for P&I owner occupied, 5.83% p.a. for I/O owner occupied, 5.79% p.a. for P&I investor, and 6.30% p.a. for I/O investor.
This multi-level pricing scheme has been introduced to meet APRA’s macro-prudential targets and has placed I/O interest rates at least 50 basis points higher than the equivalent P&I loan. Likewise, investor loans are at least 47 basis points higher than the equivalent owner occupied loan.
The bank has also introduced a number of other measures to meet these prudential requirements including setting an 80% maximum LVR limit on all new I/O loans, waiving the switch fee for customers moving from I/O to P&I, and closing the door on external refinances for owner occupier I/O loans.
Overall mortgage lending growth at Westpac is now 6.3% for owner occupied and 5.9% for investor loans.
Westpac is also on track to hit APRA’s 30% I/O speed limit with 24% of applications and 30% of settlements falling into this category in July 2017. In this same time period, $3.9bn worth of loans were switched from I/O to P&I. Of these, almost $3bn were switched because of a customer request rather than because the loan simply reached the end of the I/O period.
The trading update also released figures breaking down Westpac’s house lending portfolio by region as follows:
- NSW & ACT (41%)
- Vic & Tas (26%)
- Qld (17%)
- WA (9%)
- SA & NT (7%)
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