A bank spokesman confirmed it will no longer accept applications from new customers "seeking to refinance their standalone investment lending from other financial institutions".

He claims it impacts "a very small number of applications".

"The bank continues to assess investment lending applications from current and prospective customers who meet relevant criteria within appetite," he said.

Bankwest has provided no guidance on how long the new policy might apply or offered options for mortgage brokers or customers.

"We will continue to monitor the impact this change has on our customers and the market, in order to maintain prudent lending and sustainable business," the confidential memo to brokers claims.

Latest Reserve Bank of Australia market analysis shows investment loans across the industry grew at 0.8 per cent during December, which is twice as fast as owner-occupied loans. About one in three loans is for investment.

RBA Governor, Phillip Lowe, commenting on the decision to leave the cash rate unchanged, said: "With leverage increasing, supervisory measures have strengthened lending standards and some lenders are taking a more cautious attitude to lending in certain segments."

The bank has told brokers "it will no longer accept applications from new customers seeking to refinance their stand-alone investment lending".


Last July, the bank's pulling of its Complete Variable Home Loan investor special rates caused industry suspicion it needed to cool lending.

Other lenders, such as Teachers Mutual, were last year forced to temporarily withdraw popular investing products after exceeding the APRA limits.

CBA's half-year results on February 15 could provide more insights into group lending volumes.

BankWest is attempting to offset the impact on its loan book with special discounts for owner-occupier lenders. This includes the waiver of the $695 application fee on its popular Equaliser Home.

But terms and conditions for other loans are being tightened.

For example, it is lowering the maximum investment loan to value ratio for overseas borrowers to 60 per cent where the borrower lives overseas, or where a temporary resident or an overseas citizen is involved when borrowing in partnership with an Australian citizen or permanent resident.

It has also increased investor property home loans for existing loans for more than $200,000 on loan-to-value ratios of less than 80 per cent by 20 basis points, to 4.54 per cent. The comparison rate increase, which takes account of fees and charges, is 60 basis points.

CBA and BankWest's total market share has fallen from 29 to 24 per cent since last April, according to Australian Financial Group, a network of mortgage brokers. In Western Australia the combined share is about 32 per cent.

Other lenders are expected to lift investor loan rates as wholesale and regulatory costs rise.

"I suspect banks will want to continue to grow their mortgage books, as it is the main profit driver of retail banking in Australia," said Martin North, principal of Digital Finance Analytics, a financial services consultancy.

"BankWest's turning off the tap probably won't have a major impact as the Commonwealth Bank of Australia is still lending and has capacity below the 10 per cent cap," Mr North said.