APRA Will Take Further Actions to Control Investment Lending
As the investor loan growth in Australia is quite high especially in Sydney, Melbourne, so at this APRA head Wayne Byers says that this could lead us to take further steps to overcome this risky lending.
Mr Byers said, “APRA was keen to first assess the impact of recent moves by banks to tighten lending and raise interest rates for investors. Our mandate is to preserve the resilience of the banking system, not target housing prices in a particular region of the country”.
He further added,”Sound lending standards – prudently estimating borrower income and expenses, and not assuming interest rates will stay low forever – are just as important, and maybe even more so, in an environment where price growth is subdued as they are in markets where prices are rising quickly”.
If we talk about the increase in housing prices from the last year, then Sydney got a rise of 18.4%, whereas Melbourne got 11.5% rise, as per the Core Logic RP Data.
The major four banks are taking steps to make their lending rules strict so as to cop up with the situation and to meet APRA’s 10% limit, but Mr Byres said the moves by the major banks to raise interest rates “may well have limited impact on loan growth given the tendency for competitors to match pricing changes”.