Despite the banks’ tightening of their lending restrictions, activity in the investor segment of the market is still on the rise. Figures for January show that investor lending increased by 4.2%, marking a dramatic 27.5% increase over the past 12 months, with interest in the Sydney and Melbourne markets still running hot. This is the most marked growth since the Australian Prudential Regulation Authority (APRA) put a cap on investor credit growth of 10% per annum back in 2015.
Although the average size of loans has only risen slightly, despite stronger house-price growth, should this trend continue, further measures from the Reserve Bank of Australia (RBA) and APRA to cool investor activity seems highly likely.
Indeed, the language coming out of the RBA is all pointing to tougher macroprudential measures being introduced over the coming months. In a recent speech to government, RBA governor Philip Lowe underlined the need for greater regulation, should investor lending continue to grow.
In recent months nearly half of all banks and lenders have raised their loan rates for investors, with the average price now 29 basis points above the average price for owner-occupiers. As this is not denting investor confidence, greater measures to slow property investment seem certain, and could include higher capital requirements or slashing the banks’ investor lending growth to 7% year-on-year.
About Louisa Sanghera
Louisa Sanghera is a Finance Broker for Residential Mortgages, Vehicle and Asset Finance, Commercial Lending and Budgeting and Cashflow Coaching with Zippy Finance. She has gained more than 30 years in the Banking and Finance Industry, and since founding Zippy Finance has become a multi award nominated expert in the field of finance featuring regularly in industry press and speaking at finance and investment seminars across the country.