The APRA has indicated it is keeping a close eye on year-on-year lending growth rates and urging banks to maintain investor lending at or below 10%, in addition to insisting banks hold more capital against their mortgage books.
The measures have been implemented in direct response to significant house price growth in the Sydney and Melbourne markets and higher household debt. The aim being to provide an ongoing, robust banking system for the nation by ensuring sound lending practices are implemented across the financial system.
It is important that a cautious approach is undertaken by the regulator and broader actions aren’t being made to ‘correct’ specific markets that could have detrimental effect on those markets that aren’t performing at the same levels. With banks moving to ensure investors pay a premium on investment loans by increasing their interest rates on investment loan books, the flow on effect will hit the current market balance of investor and owner occupier and make it more difficult to get housing developments off the ground.
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