Credit Suisse figures show CBA and NAB lead landlord lending

Commonwealth Bank and National Australia Bank are dominating the investor lending market, new analysis shows.

NAB had among the strongest growth in lending to investors.

National Australia Bank and Commonwealth Bank dominate the ­investor lending market as lenders tweak strategies four years into a property boom that has been distorted by regulatory intervention over concerns lending standards were slipping, new analysis shows.

In a detailed breakdown of lending to landlords, Credit Suisse analysts found CBA, NAB and ­industry superannuation fund-owned ME had grown the strongest in the past nine months. Westpac, the nation’s biggest ­lender to landlords, has also more recently been regrowing its investor book.

In contrast, ANZ Bank, AMP, Bank of Queensland, Macquarie Bank and foreign lenders Citi, HSBC and ING Direct had stepped away from the market.

The analysts looked at the past nine months of Australian Prudential Regulation Authority data to minimise “distortions” from previous reclassifications by banks between investor and owner-occupier loan types after they increased interest rates for landlords and many customers switched. The increases to investor-­lending interest rates mid-last year occurred after APRA pressured many banks to cool growth of their investor loan books and ­adhere to the 10 per cent annual growth cap put in place in late 2014.

Banks also increased rates to boost sagging returns.

But with all the major banks having brought growth below 10 per cent, Credit Suisse’s analysis reveals NAB had recently re-entered the investor market the strongest with nine-month growth of 3.7 per cent, followed by 3 per cent for CBA and 1.9 per cent for Westpac.

ANZ’s investor book is still contracting, declining 2.2 per cent in the nine months and 0.5 per cent in July. More broadly, ANZ was “sitting on the sidelines across all lending” and shrinking assets, Macquarie analyst Victor German said. “CBA are still leading the charge in housing and had a strong month in business lending,” he said following APRA’s monthly data for July.

Reflecting on APRA’s broader property exposure statistics for the June quarter, JPMorgan ­analyst Scott Manning said the major banks were wading back into the investor market, approving about $30 billion of loans in the quarter.

Mr Manning said investor loans, although down 17 per cent on last year, continued to rise as a proportion of total new lending.

“Our view remains that major banks will continue to write more investor business given the competitive landscape for owner-­occupier mortgages and the pricing differential now established after last year’s repricing,” he told clients this week.

APRA chairman Wayne Byres this week said the regulator was reviewing its policies to safeguard the housing market, including the 10 per cent investor cap.

House price data for last month released yesterday by CoreLogic-RPData showed capital city house prices had gathered new pace, ­increasing by 1.1 per cent in the month to be up 7 per cent in the past year, led by Sydney and ­Melbourne.