Fundamental cynicism of major banks on display: Terry Ryder

Fundamental cynicism of major banks on display: Terry Ryder
Fundamental cynicism of major banks on display: Terry Ryder

The fundamental cynicism of major banks has been on display in the past week, with lenders exploiting APRA’s anti-investor measures to boost their profits.

Most major lenders have lifted interest rates for investors and then tried to represent the cash grab as a “we had no choice” situation caused by the regulators.

There is no justification for the interest rate hike. Lenders have already tightened their lending criteria in a number of ways designed to eliminate many fringe dwellers from the possibility of borrowing to buy investment properties.

The interest rate hike is clearly not motivated by a desire to further restrict investor activity. It’s simply a profit-boosting play which can be explained away, conveniently but dishonestly, as a consequence of APRA moves.

How do we know?  Because the big banks and other lenders have lifted interest rates on existing investor loans, not just on new ones.

Increasing interest rates on existing loans does nothing to reduce investor borrowing to buy real estate. All it does is boost bank profits. 

If they were fair dinkum in their claims that they’re acting “as part of our commitment in meeting APRA’s benchmark” (as Westpac tried to claim), they would lift rates on new loans only.

The Bank of Queensland, which lifted its standard variable rate for investor loans 29 basis points, has a master of weasel words on staff called Matt Baxby who came up with this classic to justify the unjustifiable this week: “We are adopting a prudent position that is aligned with the market and balances our own growth objectives with the risks associated with investor lending in general and the overall growth of investor lending in the market as a whole.”

If you can make sense of that statement, please write and let me know. I think a reasonable translation is: “We’re shafting a significant proportion of our existing customers but we’re hoping you won’t notice.”

Beyond that, the APRA measures and lenders’ response to them are an extraordinary case of overkill by bureaucrats who clearly don’t have a grip on market reality. 

The faceless APRA boffins who make their pronouncements never stand up to be identified or face any scrutiny of their actions. If we had the opportunity to question them, whoever they are, I’m quite certain we would discover their understanding of real estate markets is wafer thin.

Essentially, Sydney is having a boom and all of Australia is being punished for it.

Taking punitive measures that apply nationally in response to an issue in Sydney is tantamount to amputating a leg to cure a sprained ankle.

I note that the Property Investment Professionals of Australia (PIPA) has questioned the decision by lenders to increase interest rates for both new and established property investors, suggesting a different approach should’ve been taken to ensure a sustainable property market.

PIPA chair Ben Kingsley said APRA’s pressure tactics to force individual lenders to lock out investors have raised both concerns and question marks for the industry.

“Increasing borrowing costs for investors who bought into the market some time ago seems unfair and detracts from what should be the common goal of creating a balanced property market,” he said.

PIPA suggested that more targeted measures to slow new investor lending in certain areas, such as decreasing and restricting borrowing power for new investors in locations where the market is particularly heated, would have been a better approach.

Couldn’t agree more.

TERRY RYDER is the founder of You can email him or follow him on Twitter.

Terry Ryder

Terry Ryder

Terry Ryder is the founder of

APRA Investor Activity

Community Discussion

Be the first one to comment on this article
What would you like to say about this project?