The Australian Prudential Regulatory Authority (APRA) has reportedly written to the banks warning them not to classify borrowers as owner-occupiers in order to flout its speed limit on investor mortgage lending. From The ABC:
“A number of ADIs (Authorised Deposit-taking Institutions) have recently reported significant changes in housing loan purpose between investment and owner-occupied,” APRA’s head of data collection Barton Ashcroft observed.
“Where the change in loan purpose is not reported correctly, APRA, the Reserve Bank of Australia and the Australian Bureau of Statistics are impeded in accurately ascertaining the underlying movements in housing loans.
“Reporting of fixed-term housing loans must reflect the current purpose of the loan because the split by housing loan purpose is important for monetary policy and financial stability considerations”.
…in the past six months more than $35 billion worth of investor loans have been reclassified to owner-occupier, including another $1.4 billion in January.
In a recent research note, UBS bank analyst Jonathan Mott said there was growing scepticism about banks giving the “real story” about housing credit.
“While it is understandable some existing customers are reclassifying themselves to avoid higher interest charges as their circumstances have changed, there is increasing evidence new customers may be stating their loan is for an owner-occupied property to circumvent the additional imposts on investor borrowing,” Mr Mott said.
The switching of loan classification is evident from the ABS housing finance statistics, which shows owner-occupied lending rising just as investor lending has fallen:
Here’s a novel idea: instead of writing letters to the banks asking them to do the right thing, how about penalising those lenders found contravening the rules? I’m sure the threat of penalties would make them fall into line quick smart.
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