Westpac Reviews $515 Billion Mortgage Book to Root Out Hidden Investors
Synopsis
The lender is reassessing borrower classifications across its mortgage portfolio, with misclassified property investors potentially facing higher loan costs and stricter lending treatment.
Key Highlights
- Westpac is examining its $515 billion home loan book
- The bank itself is discovering investors that are wrongly labelled as owner-occupiers
- Loans will be automatically recategorised unless customers prove otherwise.
Westpac started sifting through its $515 billion mortgage book for borrowers who may have wrongly labelled investment properties as owner-occupied homes.
The bank has begun flagging customers who it suspects are misclassified as owner-occupiers or investors, based on a memo circulated to mortgage brokers. Any affected loans will be automatically reclassified by Westpac, unless customers can provide supporting evidence justifying the current classification.
Investors Face Higher Interest Rates
This is because investment property loans are seen to be a higher-risk loan product than owner-occupier loans, and therefore it follows that investors usually pay 15-40 basis points more on their interest rates.
Some mortgage brokers say that it is common for a section of investors to purposely misrepresent an investment property as an owner-occupied home, thereby lowering their repayments and enhancing cash flow.
Source: Capital Brief
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