Mortgage brokers are proving to be a convenient lever for the banks to pull as they strive to meet the Australian Prudential Regulation Authority’s (APRA) limit on mortgage lending.

Banks are now approaching broker clients with owner-occupier home loans to refinance in an attempt to rebalance their mortgage portfolios and limit investor and interest-only lending.

In a recent survey conducted by The Adviser, brokers who had experienced channel conflict were asked which type of loans their clients had been approached with by their bank to refinance.

Nearly 74% of brokers said clients with owner-occupier mortgages had been targeted by the banks. Meanwhile, 84% of the 766 surveyed brokers claimed that the major banks and their subsidiaries had directly approached their clients to refinance over the last 12 months.  

Australian banks face ongoing pressure from APRA to cap investor lending growth at 10% and limit interest-only loans as a proportion of all new lending to 30%.

Martin North, principal of Digital Finance Analytics (DFA), said banks are currently “powering up” their acquisition of owner-occupier loans to offset a reduction in investor and interest-only lending. North said this was being done via the banks’ proprietary channels at the expense of brokers.

Earlier this year, Commonwealth Bank of Australia (CBA) stopped refinancing investor mortgages via their third-party channel. Any CBA customers with an investor home loan looking to refinance would have to go directly to the bank.

“Two or three months ago, CBA said they were really looking to drive more momentum through their branch channels and offset the volumes through brokers. Westpac also showed in their latest results a little bit of a fall in broker momentum,” North told The Adviser. “There is a change of strategy from these lenders. They are less willing to take business from third-party channels for that particular category because they are trying to control the volume of those particular loans at the moment, thanks to the imposed speed limits and the need to reduce interest-only loans. It is a way of giving priority to their own channels.”