Liberty Group says falling house prices could help non-bank lenders because as loan-to-value ratios rise, some customers at major banks will be deemed too risky as the big four fight for the safest, “super prime” borrowers with big licks of equity.
“We expect house prices will continue to reduce in line with interest rate increases, so it is quite possible they find themselves with customers they lent to with loan-to-value ratios in the 70s who are now in the 80s or 90s, and who they don’t view as long-term customers. There may be a lack of engagement with those customers repricing rates.”
But “we are of the view that Liberty will balance increasing funding costs with risk-adjusted product pricing,” SLiberty’s results briefing also highlighted, ahead of the Jobs and Skills Summit on Thursday-Friday, that wages and rents are already rising, supporting borrower income to help them withstand higher expenses as inflation continues.