Dutch banking giant ING Groep's Australian arm expects to increase lending to housing investors this year, allowing it to gain market share as the big four banks pull back for fear of breaching regulatory caps, Chief Executive Uday Sareen said.
ING is Australia's fifth-largest retail bank when it comes to household savings balances and mortgages. It's now looking to gain ground on its bigger rivals with investor loans and new products like insurance, credit cards and personal loans.
![ING expects to increase lending to housing investors this year.](/web/20170317005441im_/http://www.watoday.com.au/content/dam/images/g/u/t/e/x/h/image.related.articleLeadwide.620x349.gv025k.png/1489696827557.jpg)
Its past focus on owner-occupier mortgages means it can increase its investor book while rivals including Commonwealth Bank are restricted from doing so as they risk breaching rules limiting growth in investor loans to 10 per cent.
"I don't think we'll be contracting (this year)," Sareen said of ING's investor loan book in an interview.
"Our investor share is below 2 per cent. If you have that kind of market share and some of our larger competitors considerably slow down, there is still volume coming through."
The Reserve Bank this week indicated that regulators could impose further restrictions on investor lending if needed to head off risks in the housing market. In the past year Sydney prices have climbed 18 per cent and Melbourne prices have risen 13 per cent.
The value of ING's housing loans to investors fell by 6.7 per cent in 2016 as it focused on increasing market share in owner-occupier loans, according to statistics from the Australian Prudential Regulation Authority.
However, ING's investor loans rebounded by 0.5 per cent in January relative to December as Australia's biggest lender, CBA, began to turn away investors looking to refinance loans and raised rates on interest-only investor loans.
Deutsche Bank analysts on Wednesday said regional lender Bendigo and Adelaide Bank also appeared close to breaching the 10 per cent investor loan cap, but other major banks still had room to lend.
Investors have roared back into the housing market, buying properties that would have otherwise gone to owner-occupiers, and embarrassing the government by taking out more than half of the new money meant for housing.
The latest figures for January mark the first time the share of loans taken out by investors has climbed back above 50 per cent since strong action by the Australian Prudential Regulation Authority in 2015 to curb bank lending to would-be landlords and negative gearers.
National Australia Bank on Thursday moved to tap the brakes on the resurgent investor market, hiking interest rates on variable home loans for property investors. But it also increased rates for owner occupiers.
Reuters with BusinessDay
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