Australia’s Heritage Bank Halts Investor Lending for Real Estate

  • Lender experienced a ‘sharp increase’ in investor home loans
  • Heritage Bank’s temporary restrictions took effect on Sept. 1

One of Australia’s biggest customer-owned banks, Heritage Bank Ltd., has temporarily stopped accepting new loan applications from property investors as it seeks to comply with regulation limiting how much it can expand its investment lending book.

The Toowoomba, Queensland-based mutual is freezing lending to new investor customers as it looks to meet stricter lending conditions put in place by the Australian Prudential Regulation Authority. Regulators have grown increasingly concerned about the risks posed by high and rapidly rising home prices in Sydney, Melbourne and Brisbane, which have fueled record levels of household debt.

“Heritage has experienced a sharp increase in the proportion of investment lending in our new approvals recently,” the lender said in a statement on Friday. “We need to manage our investment lending portfolio carefully to ensure we stay within the caps APRA has placed on growth in investor and interest-only lending.”

Read More: What’s Driving Australia’s Real Estate Boom?: QuickTake Q&A

Heritage’s move follows a similar decision by Credit Union Australia to place property investment lending on ice following soaring demand for these loans, according to a report in the Australian Financial Review on Saturday. The two companies control around 1.5 percent of the total property lending market in Australia, the newspaper said.

Heritage’s decision to halt investor lending took effect on Friday. “We will monitor our approvals and loan portfolio in coming weeks and review that decision as needed,” the lender said.

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