A leading finance CEO says there’s still plenty of room left for lending to investors despite ongoing crackdowns by the prudential regulator.
Mortgage Choice CEO John Flavell has told the Australian Financial Review there’s enough funding in the market to keep housing investors going despite lending cutbacks.
“There’s enough headroom from other lenders to absorb the shortfall if the major lenders step back a little,” he said.
“There are other financiers who don’t have caps, while some bank lenders are not growing at a rate requiring them to pull back.”
“We are not seeing slathers of people with investor lending requirements that can’t get access to finance.”
The Federal Government has formed a special working group to look at imposing tougher lending rules on banks such as further reducing the investor lending growth limit, lifting interest rates, removing interest-only loans and tightening borrowing requirements.
Mr Flavell warned of the repercussions of tightening the screw on lending too hard when he spoke to the Australian Financial Review.
“If the underlying demand is still there, you will create pressures at other points of the market if you squeeze too hard,” he said.
“There could be a shortage of rental stock and a spike in rents so those renting will feel more pain.”
“The people in greatest stress are those who are renting.”
Mr Flavell said it was better to turn the screw on lending gradually and could be well assisted by ‘jawboning’ where economists talk the economy down in the media.