Westpac smokes out secret investors across $515 billion loan book
Misclassified investors are set to pay more as Australia’s second largest bank begins reviewing its enormous loan book.
Westpac has begun a new review of its $515 billion mortgage book as it flags investors hiding out in owner-occupier loans and tightens up its risk capital weights.
In a memo sent by Australia’s second largest lender to its mortgage brokers this week and viewed by Capital Brief, the bank revealed it had begun flagging investors it suspected were incorrectly classified as owner occupiers — or vice versa — and would automatically switch their loans unless they could prove otherwise.
Investors are typically charged interest rates 15 to 40 basis points higher than homeowners to reflect a higher risk profile, making them more lucrative for lenders.
Brokers say it’s not uncommon for investors to incorrectly claim to be an owner-occupier across multiple properties in order to lower their repayments and free up cashflow.
