Surely not another Commonwealth Bank scam: surely not on top of Austrac, Libor rigging, Comminsure and Financial Services Boiler Room Inc. Surely, they are not gaming the regulators by switching customers out of investment property into “owner-occupied” homes.
The Twitter feed published below shows an investor, Bobo, asking the bank if he can switch his three investment properties into owner-occupied homes with just one phone call.
“Hi Bobo, you should be able to do this all on the one call,” tweets the friendly operator. Unless, however, Bobo has the transcendental skills to credibly claim that he can live in three seperate houses at the same time – or Bobo is perhaps at the vanguard of quantum physics and has devised the means to exist simultaneously in three different states – then this “switching” from investor to owner-occupied status would seem to be a very dubious caper indeed.
There are other explanations. Perhaps the Commbank tweet operator has got it wrong. And if so, we stand ready to amend this story. Or it could be that Bobo’s three investment properties are in the same block and he has knocked down a couple of adjoining walls.
There is other evidence however that suggests the banks might be pulling a swiftie. In order to protect the property market from unreasonable speculation, regulators compelled the banks to price their investment property mortgages higher than home loans in 2015.
The point of it was to “de-risk” the whole banking system. Though the latest Financial Aggregates Bulletin from the Reserve Bank clearly points out there has been a net switch of $61 billion in loans from investor status to owner-occupied status since the changes were introduced.
This is the test of the relevant Reserve Bank note on aggregates:
Following the introduction of an interest rate differential between housing loans to investors and owner-occupiers in mid-2015, a number of borrowers have changed the purpose of their existing loan; the net value of switching of loan purpose from investor to owner-occupier is estimated to have been $61 billion over the period of July 2015 to November 2017, of which $1.2 billion occurred in November 2017. These changes are reflected in the level of owner-occupier and investor credit outstanding. However, growth rates for these series have been adjusted to remove the effect of loan purpose changes.
To give the banks credit for something though, we will remind readers – especially hard on the heels of the release of three years of tax transparency data by the Tax Office – that the big four banks have paid $25 billion in tax over the past two years alone.