Lending changes curb NAB’s mortgage growth

Announcing its half-yearly results yesterday, the major bank revealed that its mortgage book had grown modestly from $266 billion in September 2015 to $271 billion in March, an increase of 1.9 per cent.

“We have had some slight deterioration in the first half in our home lending market share but it is not significant. I think we are growing at about 0.8 or 0.9 of system,” NAB CEO Andrew Thorburn said.

“We are confident in the quality of business we are writing, that’s the key. We are ensuring the clients we take on are the right clients for our business.”

The major lender has implemented a range of pricing and policy changes over the last six months in response to increased regulatory pressure. These include a maximum LVR of 95 per cent for owner-occupied loans and a 90 per cent LVR cap for investors.

Owner-occupied loans now represent 57.5 per cent of NAB’s total book, while investor loans account for 42.5 per cent.

NAB has capped LVRs on non-resident lending and implemented stricter policy around foreign income, while exposures to residential apartments and certain inner-city postcodes have also been reigned in and now make up less than 2 per cent of the bank’s total mortgage assets.

“The housing book as a whole is quite stable,” Mr Thorburn said. “The arrears rate in the housing book is now 0.62. It was 0.58 so it has gone up marginally. Really that has been in areas like Western Australia and Queensland where we expect to see that happen. The rest of the book is quite stable.

“In terms of high risk postcodes, we have introduced that, but we have less than 2 per cent of out book in high risk postcodes. We feel that we are monitoring that well.”

[Related: ANZ says investor loans are 'lower risk']