Via the AFR:
Westpac is set to rock the increasingly nervous property market by withdrawing new loan offers to self-managed superannuation funds looking to invest in property.
…The move has shocked mortgage brokers and financial advisers, who act as intermediaries between borrowers and the banks, but complements a change in lending strategy the banks have rolled out in recent weeks.
…”We continually review our products and services to ensure they meet the requirements of our customers,” a Westpac spokesman said.
“In order to simplify and streamline our self-managed super fund products, we will be withdrawing from sale our SMSF home loan product and business lending to SMSFs, effective Tuesday 31 July 2018.”
A billion here and billion there and pretty soon you’re talking serious money. More at Banking Day:
The withdrawal from SMSF lending applies across the group’s regional banking subsidiaries, after St George last week announced its intention to abandon the controversial lending activity.
Westpac’s exit follows damning evidence presented to the Hayne Inquiry in April, which revealed how one of its financial planners advised a client with $200,000 in an industry fund account to set up an SMSF, sell her home and take out a loan to buy a million dollar investment property.
A Westpac group spokesman did not indicate whether the decision was linked to the royal commission hearings, saying only the withdrawal would “simplify and streamline our self-managed super fund products”.
…Westpac is also tightening the terms of loan agreements that will apply to its existing portfolio of SMSF borrowers.
…Also, borrowers will no longer be able to extend their interest-only periods when their contracted period expires.
Westpac’s exit means Commonwealth Bank will be the only major institution lending to SMSFs after July 31.
Wow. The end of IO in all SMSFs. There’s some pants pooing right there.
Meanwhile, the CoreLogic leading mortgage index is still falling with no end in sight:
Finally, Morgan Stanley thinks that rate hikes won’t be enough to stabilise bank margins:
We believe the recent re-rating already factors in more than 10 basis points of repricing…there is downside risk to our margin forecasts in 2H18.
Investors have been focused on the end of the mortgage bull market, but we think they should also pay attention to household deposit growth.
In our view, this increases the potential for higher deposit rates and is a source of risk to margins which is not in our forecasts.
Or you just hike mortgage rates a lot harder and higher!
