APRA’s wish to slow down investor credit growth has been granted and the cooling off looks set to continue.
Financial comparison website Ratecity.com.au has analysed the latest housing finance data from the Australian Bureau of Statistics (ABS), which showed a seasonally adjusted drop of 6.1 per cent, or $832 million, in investor housing commitments in October
RateCity’s money editor Sally Tindall said the drop in investor lending over the last three months provided unequivocal evidence that differential pricing for home loans was having an impact on the market.
“Since July, the seasonally adjusted figures show that investor borrowing has fallen by $2.1 billion,” she said.
“Initially we saw a very slight dip in August when only a few lenders had introduced higher interest rates for investors, but now we are seeing hundreds of millions of dollars less on the loan books each month.”
What started as a small drop, Ms Tindall said, has turned into a “downpour”.
“APRA will surely be satisfied with the success differential pricing has had in such a short space of time,” she said.
“Their quest to limit growth in investor borrowing to under 10 per cent hit the mark for the first time last month and all the evidence suggests this will continue.”
While today’s ABS data showed 1.9 per cent growth in owner-occupier housing commitments, overall housing commitments have started to fall in consecutive months, despite this week’s figures showing a 1.9 per cent uptick in owner-occupied loans.
“Overall housing commitments are now steady at 0 per cent, with a seasonally adjusted drop of 2.0 per cent,” Ms Tindall said.
“Combine this with September’s results, which recorded a seasonally drop of 1.6 per cent, and it could be another sign that the market is decelerating.”
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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