In July, the Reserve Bank announced it would be introducing a further round of LVRs, which enforce a 60% LVR for property investment loans nationwide.

Since then, non-bank lenders have been touted as a solution for investors wanting to continue building their portfolios.

It comes as no surprise then to hear that non-bank lenders have experienced a deluge of new business over the last few months.

Resimac general manager mortgages Adrienne Church said that, since the banks have pulled back on lending to residential property investors, their volumes of loan applications have increased dramatically.

Prior to the announcement of the new LVR rules, they were receiving about $40 million of new loan applications per month, but this has now increased by at least three-fold.

Of the new loan applications, about 70% are from investors and just 30% from owner-occupiers.

Church said this growth in volume means Resimac has had to make a few changes to its policies on investor lending.

“While we would love to be able to continue with this growth, it’s unsustainable with the percentage of investment lending we’re receiving.

“We don’t have the same restrictions as the banks, but we do have restrictions. We need to ensure we have a sustainable, balanced portfolio and, if we continue as we are, that won’t be the case.”

Balance is the key so they can’t have books that are all investor loans – rather they are aiming for a 50/50 split between investor and owner-occupier loans, Church said.

To this end, as of next Monday (September 26), Resimac will still continue to take investment lending to 80% LVR but only if the investor’s owner-occupied property moves to Resimac as well.

Church said that if they didn’t make this change now they wouldn’t be able to support the investor segment of the market moving forward.

By doing it this way, they can continue to write investor business, she said.

“We want to aim our business at the smaller investors, rather than the professional investors with 10+ properties. They should be going for business lending.

“We want to be able to be there to help mum and dad investors.”

Resimac is not the only non-bank lender to be feeling the heat from the post-LVR increase in new loan applications.

Liberty Financial CEO Mark Collins said it is simply not possible for the non-bank lending sector to take up all the slack left by the banks under the new rules.

“We are securitised lenders so the cost of funds goes up. That means we can’t all of a sudden have a book full of investor loans. It’s just too risky. But we can take a different approach.”

For example, Liberty’s approach is to have a proviso that investment properties are in the major metropolitan areas.

“That’s our take on the situation. We all have a slightly different take on it. But, as an industry, we will always be more careful because we can’t afford not to be.”