Growth in investor lending makes APRA job misleading

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“Further changes cannot be ruled out, but given changing interest rate dynamics and signs of slowing prices and lending, there can be no assurance that further changes will be implemented.”

Total new mortgage liabilities fell 1.4% from August – in line with expectations – to seasonally adjusted $ 30.3 billion, as total homeowner loans fell 2.7% and loans to first-time buyers by 1.9%, for a fourth month of decline.

New investor loans, by contrast, rose 1.4% to $ 9.6 billion in September, marking the 11th consecutive month of expansion.

External loan refinancing fell for a second month from a record high of $ 11.4 billion in July, down 9.6% in September to $ 10.2 billion.

This certainly leaves the job to the banking regulator APRA – which increased banking service buffers last month – more delicate.

Independent economist Saul Eslake said the regulator was slow to act and the 50 basis point increase in the buffer was a bad measure because it would disproportionately affect early adopters.

“This has a greater impact on potential first-time homebuyers who are more likely to borrow at the margin of what they can afford than senior traders or investors,” Mr. Eslake said.

Investors, more likely to have high debt-to-income ratio loans – service fees being tax-deductible – should have been targeted, Eslake said.

“The right lever to pull would have been impressive [a] limit on the proportion of loans that can be granted on loans with DTI ratios greater than six, ”he said.

SQM Research chief executive Louis Christopher said APRA would be more cautious about identifying investors after the latest wave of tightening, which included restrictions on interest-only loans, triggered a “pretty tight” contraction. important “.

“The investor demographics are easy to target,” said Christopher. “It would be more politically savvy to go for the investor market rather than hitting the first-time homebuyers.”

A more targeted measure would be one such as the last decision by banks to exclude from the income calculation the rent paid by tenants on a property that an investor wishes to buy, he said.

“It would be more focused on investors beyond what is happening now,” Christopher said.


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