Macroprudential regulation has had an “immediate impact” on mortgage lending, analysts have suggested, pointing to a sharp fall in the investor segment of housing finance commitments.
Supervisory measures brought in by the Australian Prudential Regulation Authority (APRA) in March and the ensuing rate hikes targeting investor loans have seemingly contributed to a 2.3 per cent fall in fixed loans for investors in April, according to seasonally-adjusted figures in the Australian Bureau of Statistics’ (ABS) Housing Finance Data.
Analysts at ANZ also reported a fall in housing finance commitments (excluding owner-occupier refinancing) of 1.4 per cent in April according to seasonally-adjusted figures.
The drop was attributed to a sharp fall of 3.2 per cent in the investor segment, the analysts added, while predicting a “further slowing” for the investor segment over the next few months and a general cooling in the housing market.
However, they noted that annual growth remained strong with 15.6 per cent growth in April and a slight increase (0.3 per cent) in the value of owner-occupier approvals, keeping the annual rate “steady” at 6.4 per cent.
Sally Tindall, money editor at RateCity, said APRA would be pleased with a likely continued reduction in investor activity in the coming months but questioned if the reduction would “stick”, noting that the regulator was interested in long-term results.
“Last time APRA cracked down on investor lending we saw an immediate drop in the figures but the numbers started climbing back up within six months,” she said.
Ms Tindall pointed to a sharp reduction of 4.4 per cent in refinancing activity as another point of interest. Refinancing commitments came to $5.8 billion in April, pulling the annualised rate down by 17.8 per cent.
She commented: “We saw a rise in March when the banks all hiked their rates out of cycle but the numbers of refinancers have fallen away once again.”
“The average mortgage holder could save over $2,500 a year by switching to one of the lowest lenders on the market and over $70,000 over the life of a 30-year loan.”