Westpac safe from lending crackdown

WHILE Westpac is exposed to investment property, it is not necessarily the most vulnerable to a lending crackdown.

WHILE Westpac is among the major banks with the biggest exposure to investment property, it is not necessarily the most vulnerable to any lending crackdown by regulators.

An assessment by brokerage JP Morgan of the potential impact of so-called macro-prudential tools aimed at curbing a heated housing market in Australia, could also see the lending crimp hit the Melbourne-based rivals ANZ and National Australia Bank.

The Reserve Bank last week confirmed a crackdown on lending to property investors is on the way but has ruled out hard limits on loan sizes that would hurt first-home buyers.

Senior RBA officials, appearing before a Senate committee on housing affordability said new “macro-prudential” rules were the first item on the Council of Financial Regulators’ agenda at a meeting early last month and foreshadowed a more detailed announcement before the end of the year.

Although Westpac has around 33 per cent of the market for investment housing any measures would hit future lending rather than existing loans, said JP Morgan’s Scott Manning.

“If new policy measures are forward looking, (lending) flow may be more may be the more important consideration,” Mr Manning said. While Westpac dominates the housing investment market, since October 2011 growth in its lending book has tracked in line other major banks.

Indeed , any slowing of demand from investors “may be an unwelcome trend for ANZ and NAB as both look to re-tilt towards Australia to offset lower levels of profitability in Asia and the UK,” Mr Manning said.

RBA officials have suggested any new rules would not involve hard limits on the amount able to be borrowed, but would make high-risk lending less attractive for financial ­institutions.