AMP joins rate hike charge

From AMP:

The pricing and policy changes for investment property loans, include:

  • Variable interest rates for new and existing investment property loans will increase by 35 basis points
  • For all new investor property loans, the maximum loan-to-value ratio (LVR) is reducing to 50%. This change applies to all new loans with an investment property as security and includes loans to SMSFs

The changes to interest rates are effective 23 June 2017 for new customers and from 26 June 2017 for existing customers. LVR change is from 21 June for new investment property loans and 1 July for SMSF investor loans.

Sally Bruce, Group Executive AMP Bank commented: “These measures are needed to ensure we operate within our regulatory obligations.

“We’re committed to managing our portfolio responsibly while balancing this with the interests of our customers.

“We are managing our loan book in a very active market and these changes follow recent shifts in competitor activity.  We will continue to take the necessary steps for sound management of our regulatory requirements,” she said.

Comments

    • That’s what I thought, only with more aaaaaaaa’s in it!!. 50 LVR!! And a 35 basis point increase. Effective as of the next few days!

      Eventually…eventually…all the the specufestors who are running IO loans will find that the negatively geared losses are actually getting pretty big and covering the loan will start to hurt, and there will be nowhere to turn to when they want to refinance the IO period. And nobody at all is going to be taking out new IO investment loans for property speculation at 50 LVR.

      I dunno how big AMP’s IO loan book is, but it must be pretty substantial if they’ve decided to cool things down this fast to meet their compliance obligations, so I suspect that these measures are really going to hurt a few property empires.

      • Alternative (to their loan book being “pretty big”) is that it’s already full of garbage. And they desperately need some insanely high quality loans to mask the toxicity for a few more months. Cause it’s just a gully.

      • @Ino,

        Don’t take this as “advice”, but yeah.

        Seriously, if the stories about financial institutions having 60-70% of their loan books as IO are true, then they may be in a spot of bother once those loans really become seen as sub-prime, and the loan holders start to go bust.

        I certainly wouldn’t be buying shares in banks right now.

      • [email protected]MEMBER

        I might have a funeral to attend b4 xmas…..35bp^ and no rolling…thats tuff..but 50 lvr? thats impossible

      • That’s what I thought, only with more aaaaaaaa’s in it!!

        Put me down for another 50 or so aaaaaa’s between the ‘F’ and ‘rrrk’ also …

        More telling is how much profit AMP is prepared to turn its back on now. It is effectively saying no more investor business at all; if I were wanting them to write me business at 50% LVR, they would need to be charging me near zero interest or they could go and f#ck off. I did not think they gave out bonuses for how much shite you turned away? This has got to hurt many inside AMP in addition to the wider Church of Propertology congregation?

        Worse still it is a very much closing the gate after the horse has bolted scenario because if they have piles of steaming crap on their books now and impose these conditions all they will be left with is crap, they are not going to balance it out with prime business. Does anyone know what terms they had been writing for their investor stuff? If 3-5 years then they can start pushing sh#t over the side, but if not that loan book is going to smell like the bins outside the Sydney Fish Markets in summer pretty soon.

      • [email protected]MEMBER

        amp first to go?…..big4 first for mine….using oz resi mortgages as the filter here.

  1. Sally Bruce, Group Executive AMP Bank commented: “These measures are needed to ensure we operate within our regulatory obligations.
    “We’re committed to managing our portfolio responsibly while balancing this with the interests of our customers.

    These statements sounds as if they were work-shopped to make them intentionally misleading of the real motivation for the increase …

    A from the heart statement would have read something like …

    The Board and management are starting to get nervous. We have been slow to react compared to the rest of the market, and we notice a lot of dodgy borrowers are coming our way. Plus, we don’t have the balls to lean into this bubble so we are going to manage our future commitments pretty cautiously.

    Most importantly, we need to protect the metrics that are going to land us huge bonuses at the end of the year. Please stay tuned for another update in the next month, and hopefully we will be ahead of the pack instead of behind it.

    • I think the addendum to that may well be

      “And we have just realised that 85% of our investor mortgage book is uninsurable due to illegal flammable cladding. Our insurence branch is seeking legal advice”

  2. Actually, things are just beginning to happen. The effects are slowly being felt. This is not going to slow down, its going to be the opposite. I had a conversation with one of my lower north shore neighbours who’s husband works for a lending division (which one? Not sure the details but will update later). She said her husband who works for NAB in Sydney (George St) said he values his job so much that if the company wanted to stick a hot poker somewhere he would let them if he had too. As long as he wasn’t on the layoff list. She said he’s just happy to have a job and told her to expect lots more long hours and just be happy he’s employed. Apparently, he said his colleagues were dropping like flies. He says a crash is coming. Now the cynic in me wanted to say sounds like an excuse for an affair, but I’ve known this chap for a couple years and he don’t seem the type. Any way i’m seeing him for golf on the weekend so will get more info, find out if his wife was exaggerating.

      • [email protected]MEMBER

        growth plan update…a a big FU for real banking….chisel the life outa the rest

        http://www.asx.com.au/asxpdf/20170525/pdf/43jh4w1wcx9b9n.pdf

  3. [email protected]

    If a lender asks for 50% deposits he really says “I don’t want your business”. This is most peculiar and one must wonder what they know that the rest of the lenders don’t?

    • Zackly. Saying “I don’t want you business” to a certain class of investor is one thing…investors with more than 5 properties or $2M leverage etc are no longer welcome. Saying that to every property investor in the country is a huge step….no more investment property lending at AMP!! It’s beyond peculiar, and reeks of panic. It’s like someone high up in their food chain just had the biggest “Oh Shit” moment of the century and decided to throw out the anchors.

      Now…who, if anybody, is going to be next? I can’t imagine a major institution like AMP will be the Lone Ranger among Loan Arrangers to do this, because whatever they know that drove this decision is going to leak out one way or another.

      I’m all agog, waiting for further gossip…

      • [email protected]

        Zactly, LSWCHP! You hit it on the head a lot better than me!

      • So practically they did margin call (I mean the movie). Decided to get out first. Or trying to..

      • Im hoping its a knee jerk reaction to the cladding issue. Imagine all those apartments being unsellable. He who blinks first blinks best.

    • well, they (AMP) know what the quality of their loan book is and how much shit is in it.

      so they are either getting right out in front of the curve, or someone has just opened up the door that says “do not open – Investor loans paperwork” and was floored by the stench coming from the steaming piles of mess that their brokers have left.

      • mark777MEMBER

        Before so 40%? Also friend her works there said they just went through a massive restructure

    • [email protected]

      Candice, this is a correct way to interpret that move

    • No – AMP has hit the new APRA prudential limits on investor loan growth – it has nothing to do with their outlook on property prices. The 50% LVR is a polite way of saying the taps are turned off. When they are back under the new APRA rules, they will play again.

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