Westpac transforms home loan book

The latest APRA Monthly Banking Statistics show that Westpac’s total mortgage book was valued at $356 billion at 29 February, up 8.1 per cent from February 2015.

However, a closer look at the composition of the bank’s book reveals a 22.7 per cent surge in owner-occupied lending over the year, while the group’s investor loan book fell by 9.5 per cent over the same period.

In comparison, all other majors grew their investor loan books over the 12 months to 29 February. ANZ saw a 2.9 per cent increase, CBA grew its investor loan book by 3.0 per cent and NAB by 9.3 per cent.

Back in October, Westpac became the first of the four major lenders to increase its variable mortgage rates, announcing a 20 basis point hike across both owner-occupied and investor home loans.

The remaining majors followed suit with similar hikes a week later.

When it announced its full-year profit results in November, Westpac noted that it had seen significant levels of customers switching from investor to owner-occupied loans in response to pricing and policy changes.

At the time, investment property loans accounted for 44.5 per cent of Westpac’s Australian mortgage portfolio.

APRA’s latest banking statistics for February show that investor loans now make up 38 per cent of the group’s total mortgage book.

The prudential regulator’s measures to cool investor lending have made a significant impact on the composition of Westpac’s mortgage book, and are clearly reshaping the competitive forces in the Australian home loan market. Westpac’s surge in owner-occupied lending over the 12 months to February is an example of this.

ANZ saw the second highest increase in owner-occupied lending, recording 15.1 per cent growth. ANZ grew its total loan book by 10.4 per cent, the highest growth achieved by a major bank over the past 12 months.

[Related: Investor loans at risk of default]