ANZ is removing restrictions on lending to apartment buyers in Brisbane and Perth as part of an attempt to revive its ailing home mortgage business.
The bank has notified home loan brokers that it will be scrubbing most of the curbs on loans for apartments in the two capitals from 16 August.
ANZ tightened lending requirements for borrowers wanting to buy apartments in October last year when it stopped accepting applications from owner occupiers and investors who could not stump up a 20 per cent deposit on purchases.
In a memo sent to mortgage brokers on Friday ANZ confirmed it now planned to accept applications from apartment buyers requesting loan to value ratios above 80 per cent.
“Effective Monday 16 August 2021, the standard LMI/LVR policy will now apply across all of Brisbane and Perth,” the bank told brokers.
“This means the LVR restrictions, previously imposed on some inner city suburbs for apartment lending, will no longer apply.”
ANZ’s decision follows Suncorp’s move last week to scrap similar LVR restrictions on apartment purchases in the Brisbane CBD.
Both lenders have lost market share in home lending this year, particularly ANZ which has suffered a A$1.5 billion contraction in the size of its mortgage book.
The major bank’s shrinking home loan portfolio is set to negatively impact its second half bottom line.
ANZ is also ceding market share in other credit segments, including high margin business lending lines.
The contraction in the size of the bank’s lending business has contributed to a build-up of surplus capital.
While ANZ has characterised its decision to launch a $1.5 billion share buyback as a sign of financial strength, it also reflects a lending operation in run-off.
Moreover, the prospects for a big recovery in the bank’s lending volumes might be constrained given that chairman Paul O’Sullivan hinted at more buyback programs in the near future.
“After reviewing options, we consider an on-market buy-back to be the most prudent, fairest and flexible method to return capital in the current environment,” he said last week.
“Our capital position may allow future capital returns to be considered.”