In a further sign of lender crackdown, the Commonwealth Bank has made an out-of-cycle interest rate hike to investor loans.
The bank’s CEO Ian Narev admitted the move was driven by the Australian Prudential Regulatory Authority’s ten per cent cap on investor growth a year.
“We’ve been under the benchmark – none of the actions we’ve taken has been a result of requirements from APRA,” he told the ABC.
“But they’ve made it clear to every bank that they expect us to remain within the benchmark.”
“We’re very careful when we look at the property markets not to make assumptions that today’s conditions are going to continue.”
The Commonwealth’s interest rate hike is by 12 basis points and comes after the bank last week announced it would not accept refinancing applications from property investors who wanted to switch from other banks.
Martin North from Digital Finance Analytics told the ABC an overly tough crackdown on lending could actually cause a property crash that it’s trying to prevent.
“I’m still expecting property prices in the east coast states to continue to rise this year, not quite as fast as last year,” he said.
“But, if lenders start turning the taps off, that could all change.”
“If investors moved away from the market, then there would be insufficient demand from the other sectors of the market to keep prices where they are, and then they’d slip.”