Broker begs APRA to be more specific

by Julia Corderoy30 Sep 2015
A top broker has a stern word for APRA, saying the banking regulator is making the market “absolutely impossible” for a broker to keep up with changing lending policies.

Stephen Dinte, founder and principal mortgage planner of Sydney-based brokerage Australian Mortgage Planners told Australian Broker that APRA’s constantly shifting regulations – most recently the 10% limit on investment lending – are making the market needlessly difficult for brokers while giving the banks a free pass to price gouge. 

“APRA has gone to the banks and said we need to cool the property market, so we want you to limit your lending for investment property to 10% of your book. Everyone understands that and whether not they agree with it is not really relevant. However, this question came to me – what about people who want to borrow money [against their home] for an investment purpose but not real estate investment? For example, the Australian share market or some sort of managed fund that their financial planner has recommended to them. Is that in the same ball park or is that outside of that 10% limit?

“Based on that, I then wrote to a number of BDMs and a number of the lenders and posed the question and the responses were mixed. Some were saying it is part of the 10% – if it is an investment, regardless of what the actual investment vehicle is, it is part of the 10% limit. Others were saying no, if the investment is not for real estate then it doesn’t count. They don’t know.”

While Dinte himself believes non-property investments should be excluded from APRA’s limit on investment lending, he says it illustrates how overly complex and confusing the market has become.

“APRA needs to be more specific. It just emphasises the challenges that are being faced out there because APRA is not doing its job properly in saying to the banks this is what you need to be doing… but the banks must be rubbing their hands in glee because there is now price gouging with these higher investment interest rates. It is an excuse to make bigger profits,” he told Australian Broker.

“It is absolutely impossible for a broker to keep up to date with lending policies today unless you have a robot brain. Putting aside whether the loan is owner-occupied or investment, even within an LVR band, you can have three or four interest rates based then on the loan amount.

“So any one bank could have up to 20 different interest rates. You multiply that across 30 or 40 lenders who are on your panel and it is impossible for a broker.”