Mutual lender tightens lending guidelines on investor and owner-occupier loans

by Julia Corderoy26 May 2015
Heritage Bank has announced LVR caps on investor loans as well as changes to how it applies the qualifying rate for all mortgage lending, in the wake of an APRA crackdown on home lending.

This announcement comes after CBA and ANZ announced they would be withdrawing discounts and other special offers extended to brokers on property investment loans, in response to fears about an over-heated property market and risky lending standards.

However, instead of announcing changes to pricing discounts available on investment loans, Heritage Bank has followed the lead of New Zealand and clamped down on LVR limits.

A note sent to brokers yesterday announced the mutual lender will decrease the maximum LVR for investment loans to 80%. 

“As you know, APRA has recently foreshadowed the need for financial institutions to tighten credit practices in the home lending sector. APRA is particularly concerned about investment loans overheating the market, and the future serviceability of loans that borrowers take out in today’s low-interest environment,” Paul Francis, general manager, retail services noted in the correspondence obtained by Australian Broker.

“Heritage has always been a responsible lender and these changes will further ensure we meet the expectations that APRA has outlined.”

Further, the mutual lender announced it will be tightening how it applies the qualifying rate for all mortgage lending – including both new borrowers and existing borrowers looking to top up their loan. 

The changes mean that Heritage will be qualifying lending commitments for mortgage loans by adopting whichever is highest of the qualifying rate or the actual rate + 2%. The qualifying rate will remain at 7.15%.

Both changes will apply to home loan applications received from Monday 25 May 2015.

Meanwhile, St George has urged brokers to send investment loans to them, as they have not announced any changes yet.

In an “urgent” note to brokers on Friday, the non-major said to “get any Investment loans in to St George while our policy has not changed”.

It also stated that investment pricing is “still on the cards”, although it may not be staying for much longer with what is happening in the market.

“Please send that Investment Loan in ASAP so not to be caught up in any changes,” St George noted.


  • by Brado 26/05/2015 9:31:24 AM

    So with ANZ and CBA announcing no investment loan rate discounts will be available to brokers... will they still offer it in their branches?

  • by Allan Faint 26/05/2015 9:33:13 AM

    So why do this across the board. why not only in those few suburbs and cities where it is a problem. is ok to have postcode restrictions on regional suburbs why not the same on the hot Sydney suburbs. why should cities such as Hobart be penalized due to the supply and demand issues of other areas.