APRA on ‘high alert’ as investor lending soars

ANZ Research noted that the recent acceleration in investor activity “is sure to keep both the RBA and APRA on high alert, as market sentiment shows no signs of easing”.

The total value of housing finance commitments rose a solid 1.5 per cent in January.

“This was entirely driven by the investor segment, which came roaring back to the market after a slight decline the month prior,” ANZ Research said.

“Investor growth of 4.2 per cent m/m saw annual growth push higher to 27.5 per cent. This is the fastest rate of growth since August 2014 – before APRA’s macroprudential regulation took effect.”

The continued strength of the investor market remains an important issue for both the RBA and APRA. While no further macroprudential measures have been announced, AMP Capital chief economist Shane Oliver continues to believe more curbs are on the way.

“While I may be jumping at shadows, the latest post-meeting Statement from the RBA implied a bit of unease regarding lending to residential property investors and lending standards, probably on the back of the continuing surge in Sydney and Melbourne home prices,” Mr Oliver said.

“Most notably in the February Statement it said that “supervisory measures have strengthened lending standards” whereas it's now saying that “supervisory measures have contributed to some strengthening of lending standards” which suggests the RBA thinks a further tightening in lending standards in relation to lending for housing may be required,” he said.

“More macroprudential measures to slow property investment may be on the way and this could take the form of lowering the threshold for growth in banks’ total lending to investors to say 7 per cent year-on-year from 10 per cent currently.”

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