Westpac chief executive Brian Hartzer has fended off allegations that his bank is overinflating its customers’ incomes to sell them mortgages.
Appearing before a parliamentary committee inquiry in to the major banks, Westpac chief executive Brian Hartzer faced questions from Greens MP Adam Bandt about the bank’s lending practices.
Mr Bandt referred to the case of Michael and Kaye Downer, 65 and 60, who told ABC’s Lateline they were lent $500,000 by Westpac to buy a house and land package in 2012.
However, the Downers (who had been Westpac customers for 20 years) later discovered that Westpac had valued the property and land at $400,000 – and overinflated Mr Downer’s gross annual salary by more than $30,000.
While Mr Hartzer said confidentiality prevented him from discussing the details of the case, he said an internal investigation had cleared the bank of any wrongdoing.
Mr Bandt pointed out the 2014 Financial System Inquiry’s concerns about the high exposure of the Australian banks to residential mortgage debt.
“We’ve got a potential housing bubble and there doesn’t seem to be a great level of concern about whether banks are lending too much or in fact inflating peoples’ incomes so they can borrow more,” Mr Bandt said.
In response, Mr Hartzer said Westpac is “very concerned to make sure that people don’t have more debt than they can afford”.
“One of the easiest ways for a bank to have a big problem is if there’s a big credit bubble. That’s the last thing we want,” he said.
“We believe that the fundamentals of the Australian housing market are sound, but we do acknowledge absolutely that housing has become more difficult for people to afford.”
Mr Hartzer said Westpac has been tightening its lending criteria in line with APRA regulations over the past few years.
“We’ve worked very closely with our regulators to compare data across banks to make sure that we’re not getting out of line on that and we have no incentive to lend people money for a home they cannot afford,” he said.
“That is counter to everything that we are about and it’s not in our commercial interest.”
Magellan chairman and CIO Hamish Douglass has said he’s not afraid of missing out on a “short-term market rally” and that mutant virus...