Westpac Group raises LVRs for investor lending The Westpac Group has raised the maximum loan to valuation ratio allowed in interest-only investor home loans from 80% to 90%, including capitalised mortgage insurance premiums. The changes apply to investor home loans issued by Westpac and the bank’s subsidiary brands, St George, Bank of Melbourne, BankSA and RAMS. Westpac’s changes to LVRs on interest-only loans does not apply to owner occupiers. Interest-only owner occupier loans are still capped at 80 per cent LVR. Westpac eases up on investor expenses The Westpac Group is easing restrictions on investor home loans following its court victory over the regulator ASIC regarding its use of the Household Expenditure Measure (HEM) to assess the expenses of loan applicants. People applying for an investment home loan to Westpac Group lenders (that includes the subsidiary brands, St George, Bank of Melbourne, BankSA and RAMS) may find the process easier from today. If a loan applicant states their household expenses are more than 130 per cent of the Household Expenditure Measure’s standard expense levels they will no longer be referred for more credit assessment. Westpac said the change will save time and deliver faster outcomes to customers. The household expenditure measure (H.E.M.) is used by lenders to assess your loan application. Local investors carry more risks Two thirds of investors buy an investment property located close to where they live according to new research from University of Tasmania and University of Sydney. There are several reasons, firstly the time, effort and travel costs are typically lower. Second, property investors who self-manage without an agent find proximity an advantage. One fifth of investors self-manage their properties according to the Real Estate Institute of Australia. Investors may also believe they know their location better than non-locals but investing locally has risks but your local property market may not be the best performing market. Sophisticated investors are more likely to invest outside of the suburb in which they live. Investing non-locally is more likely among investors who already own shares, already receive rental income, and work as managers. Home sellers can buy first, sell later with Brickfloor A new fintech start-up company based in Victoria has launched a unique “insurance policy” type of service for home sellers. With Brickfloor’s “Home Price Guarantee,” home sellers get a commitment from Brickfloor to buy the home for a competitive price based on comparable sales. If the seller then goes to market and sells the home for a higher price they keep 100% of the difference. If the home fails to sell, Brickfloor buys the home for the agreed price, minus a two per cent fee. Dean Fraser, CEO of Brickfloor said the home price guarantee can eliminate some stress and uncertainty from the sale process. Bank Australia is attracting customers – from other banks Bank Australia’s home loan sales increased 22.45 per cent in the last financial year. Bank Australia funded $1.46 billion in loans over the year. Bank Australia said 19,000 new customers had moved from other banks to Bank Australia. Bank Australia’s total assets grew 12 per cent to $6.33 billion last financial year producing a net profit after tax of $22.82 million. Bank Australia has a very high Net Promoter Score of 44.6 and high customer satisfaction levels of 88 per cent. Bank Australia is banking on going green Bank Australia is a Melbourne based mutual bank growing strongly on the back of high customer satisfaction scores and a well-publicised commitment to going green and being carbon neutral. Bank Australia aims to source 100 per cent of its electricity from renewable energy by 2020. Bank Australia’s managing director, Damien Walsh, told Australian Broker the bank’s clean money campaign was boosting its bottom line. “During 2019, we evolved the ‘bank Australia needs’ brand strategy with the launch of our clean money position,” said Mr Walsh, “More than 60 per cent of customers are now switching to Bank Australia because of our approach to more responsible banking.” Afterpay shares continue to slide Last week the Reserve Bank of Australia announced an investigation into the ban on merchant surcharging imposed by Afterpay and other buy now, pay later apps on shops and other retailers. The Afterpay share price fell 22 per cent after the announcement. Afterpay is now trading at $29.21, down from above $36 last week. The ASX chart below shows the APT share price in October 2019. Afterpay is accepted at over 30,000 merchants in Australia. Afterpay is free to use if repayments are made on time.