Nervous investors have not inundated non-bank lender Firstmac in the wake of APRA’s tightening of bank regulations on investor loans.
“We haven’t seen any spike in loan applications from investors since APRA moved on banks, even though there has been speculation that this could be the outcome,” said Firstmac CFO, Mr James Austin.
Despite not being regulated by APRA, Firstmac has taken careful note of developments in the regulatory environment and made its own policy adjustments ahead of any broader prudential measures to control house prices.
“In response to recent tightening of policies targeting banks, we have ceased SMSF lending and will review our investor loan variable interest rates, on top of the robust controls we already have in place.”
Mr Austin said Firstmac’s recent $1 billion RMBS transaction attested to the non-bank’s outstanding credit quality.
“Our success in bond raising is due to our credit quality, which has never been better,” he said.
“Our 30+ days arrears numbers are at 0.61 percent which means more than 99 percent of our borrowers are current in their payment schedule. This is better than industry averages which are dominated by APRA-regulated banks.
“89 percent of the loans written in 2015 had a loan to value ratio below 80 percent. Just because our interest rates are at record lows, doesn’t mean we have relaxed our credit criteria.”
Firstmac’s growth rate is at 20 percent, with a similar balance of owner-occupier to investment loans as it has traditionally observed. In fact, in the year to April 2015, investment loans have fallen as a percentage of the portfolio by 3 percent.
“The mix of investment loans has not increased even though our growth has accelerated, which shows we are a viable option for owner-occupiers and investors alike,” Mr Austin said.
“Non-banks remain a crucial pricing point to keep the banks accountable to the lending public.”
Firstmac Limited is 100% Australian owned with over 30 years of experience in home and investment loans which makes us a great alternative to the major banks. Firstmac manages roughly $5 billion in mortgages and $150 million in cash investments through offices in Sydney, Melbourne, Brisbane, the Gold Coast and Singapore. Firstmac Limited has market-backed insurance products backed by international companies, such as Allianz Group and Ace Insurance Limited. International ratings agency Standard & Poor’s gives Firstmac its highest possible ranking (“strong”) for loan serviceability abilities.
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