ANZ chief executive Shayne Elliott said removing responsible lending provisions from the consumer credit law would only increase loan approvals “at the margin”, if at all, and that the information lenders are currently required to gather about loan applicants is detail they would want to know anyway.
Speaking at an investor briefing on Thursday, Elliott said the change would make some operations easier for the bank but it would not change its risk appetite.
In September, Treasurer Josh Frydenberg announced that the government will remove the responsible lending provisions from the National Consumer Credit Protection Act and rely on APRA’s prudential supervision to regulate lending practices.
Frydenberg said the current responsible lending provisions are “overly prescriptive, complex and unnecessarily onerous on consumers.”
He has also said: “The risk that the provision of credit may cause substantial hardship to some should not result in a significantly reduced ability to access credit by the vast majority of borrowers.”
Elliott said: “At the margin there may be some loans that will get approved that would not under responsible lending, but we think it is only at the margin.
“What will happen is that the process for borrowers will be faster and less invasive. We won’t have to ask the same level of questions of every customer.
“But when you sit back and look at the process we have to do now, most of it is sensible.
“Of course we want to understand somebody’s income and of course we want to understand their financial position, and of course we want to understand their expenditure.
“It will make it a little bit easier for us, so we think it is about operational efficiency rather than unleashing any new loan growth.”
ANZ’s financial report shows that the stricter application of the responsible lending rules in response to the findings of the Hayne royal commission has not forced the bank to restrict the amount of finance it is prepared to provide to house buyers. It has continued to steadily increase the size of its mortgages.
The bank has just over one million loans in its Australian mortgage portfolio, worth A$275 billion.
The average loan size has grown from $269,000 in 2017/18 to $270,000 in 2018/19 and $273,000 in 2019/20. The average size of loans originated in 2018/19 was $378,000, rising to $391,000 in the year to September.
Sixty-eight per cent of the book is owner occupier lending, 30 per cent is investor lending and 2 per cent is equity line of credit.
Seventy-eight per cent of loans are set on variable rates and 22 per cent fixed rates. There was a big increase in demand for fixed rates over the past year, with 30 per cent of mortgages originated in 2019/20 set on fixed rates.
The average loan to valuation ratio of the loans at origination has remained steady at 67 per cent. Seventy-six per cent of borrowers are ahead with their repayments and the bank has a total offset balance of $33 billion.