CUA urges APRA over lending limits as it seesaws on investor loans

The nation’s biggest member-owned lender is dipping back into investor property loans but remains wary of APRA’s cap.

CUA chief executive Rob Goudswaard. (Picture: Annette Dew)

CUA, the nation’s biggest member-owned lender, has jumped back into investor property lending after hitting the pause button earlier this year, but says it may have to “lurch” back out of the market if it comes close to breaching APRA’s cap again.

The lender was forced to stop writing new loans for property investors in March as it approached APRA’s 10 per cent year-on-year lending growth cap, but it recently began a limited, phased return to investment lending.

CUA chief executive Rob Goudswaard told The Australian he would like to see APRA finetune the regulations to take into account the size of different lenders and their impact on the market.

“I get where they’re coming from … but if it was up to me, I probably wouldn’t apply the rules the way they’ve been applied because it helps if you’ve got a very strong inherent position when you do a percentage change on that and that obviously doesn’t help us.

“If you look at the main contributors to the 10 per cent increase at a macro level, I don’t believe the mutuals would be making much of an impact on that. We would like to see a position where maybe our effect isn’t under the same regulations as those who have more of an effect.”

The inability to write investor home loans had a significant impact on the business, Mr Goudswaard said, to the point where not only was it not attracting new members, but its ability to retain existing clients was severely depleted.

The credit union is currently offering investor home loans to new members who concurrently apply for an owner-occupier loan, and has just dropped its fixed rates for investor loans by 10-20 basis points.

Year-on-year investor growth is currently sitting around 5 per cent, but lending volumes are being closely watched to ensure it remains below APRA’s cap. If it moves closer to the cap it may have to hit pause once again.

“We don’t want to be hot and cold, we’d like to be steady the whole time. But [the cap] means that you have to have a certain clairvoyance in how you see the market unfold. We’re hoping we don’t have to lurch from one thing to another but clearly we are not in a position to breach regulations,” Mr Goudswaard said.

CUA, the country’s 12th largest home loan lender, increased net profit 8.1 per cent to $55.87 million for the year to June 30, but “challenging market conditions” saw its banking division report a 6.4 per cent drop in profit to $49.65m.

“The 6 per cent fall in profit was driven by a deliberately slower start to the year. It was a very competitive three or four months and rather than play in a very competitively priced market we decided to hold back a little bit,” CFO Steve Chugg told The Australian.

“It was a solid result for us but we’re making sure we’re trying to balance the interests of the members but also get a reasonable level of growth in terms of capital accretion for the businesses.”

The credit union has experienced a similar slow start this year, Mr Chugg said.