As reported last week, the Australian Bureau of Statistics has admitted it had under-reported the first-home buyer share in Australia’s property market, and one prominent aggregator head says it could even push up interest rates.
The ABS had to revise it’s data on loans to first-home buyers by around 25 per cent because of what it says was under-reporting by some lenders.
Managing director of 1300HomeLoan John Kolenda says the ABS under-reporting created a false impression that the home finance market was dominated by investors which in turn prompted a crack-down from the Australian Prudential Regulation Authority.
“APRA has said one of its specific areas of prudential concern is when lenders increase their investor lending by more than 10% during a year,” he told Broker Online.
“While APRA says going above that threshold is not wrong or warranting action, it has indicated it will be an important risk indicator for APRA supervisors when considering the need for further action.”
If APRA does take action, this is where M Kolenda says it may put upward pressure on interest rates because it could force banks to stop lending to investors or force them to hold more capital aside in order to lend.
“This in turn would force banks, if they wish to continue lending to higher risk assets, to do so at a higher interest rate or otherwise face a backlash from their shareholders as their profitability and dividend payouts will fall,” he said.
“At the end of the day our regulators should have access to reliable and accurate data when forming policy decisions. Anything less than this is unacceptable and it may end up costing Australian home owners.”
Whether interest rates end up affected or not, this episode certainly highlights the importance of keeping accurate financial statistics.
