Lending growth to housing investors slows to lowest level in two years

Interest Rates

Housing investor loan growth has slowed to its lowest speed in two years, reined in by the banks’ tougher lending practices and increased home loan rates for investors.

While investors are walking away from the property market, owner-occupiers are picking up the slack and it remains a point of strength in credit growth across the economy.

The Reserve Bank says the value of housing loans to investors has slowed to a crawl, growing by just 0.3 per cent in the month of January. It has grown by 7.9 per cent in the year to that month.

As stated, it’s owner-occupier credit growth that’s been picking up the slack, accelerating to a 6.9 per cent growth for the year.

The big banks have been under direction from the Australian Prudential Regulation Authority to keep investor credit growth below 10 per cent since December 2014 amid concerns of an overheating market.

In response, the banks lifted their deposit requirements for investors and also hiked their rates for those same customers by around 0.27 of a percentage point.

ANZ economists Daniel Gradwell and David Cannington told The Australian Financial Review the measures from APRA were taking their toll.

“Investor credit growth remained soft in response to APRA’s macroprudential targets, which have resulted in tighter borrowing conditions for investors in the past year,” they said.

“Although stronger owner-occupier credit growth has provided some offset to this, overall housing credit growth has slowed in recent months.”

The economists did note that the healthy start to 2016’s auction markets could lead to stronger housing credit growth.


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