Promising real estate loans, but investors withdrawing | Liverpool City Champion


The amount of outstanding mortgages in Australia has grown at the fastest monthly rate in four years.

But economists doubt that financial regulators are too concerned at this point about still relatively low lending to investors.

New figures from the Reserve Bank of Australia showed home loans rose 0.6% in May, the biggest increase since June 2017.

Annual growth now stands at 4.8%, its highest level since 2018.

Homeowner loans rose 0.7% in the month to 6.6%, also the highest rate for the year since 2018.

However, growth in loans to real estate investors remained relatively modest, increasing from 0.4 percent in May to 1.6 percent.

National Australia Bank economist Taylor Nugent said that while investor credit growth has recently picked up, it is unlikely to be of too much concern to regulators.

“Credit growth is being watched closely in terms of assessing the likelihood of macroprudential policy tightening given soaring house prices,” Taylor said.

“There is little in today’s data to change the optimistic view of regulators.”

Earlier this month, a meeting of the Board of Financial Regulators agreed that overall lending standards in Australia remain sound.

The board is made up of the RBA, the Treasury, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission.

However, the banking watchdog, APRA, wrote to the nation’s largest banks, warning there were signs of increased risk-taking as homebuyers rushed to get loans in a market. of heated accommodation.

A study released ahead of Wednesday’s data by Moody’s Analytics, which operates independently of rating agency Moody’s Investors Service, suggested that APRA is set to intervene in the housing market to slow the dramatic momentum seen in the capitals.

APRA has already intervened to curb investor demand for housing.

“Macroprudential tools are particularly useful with low and sustained interest rates because they can target pockets of concern,” said Katrina Ell, senior economist at Moody’s Analytics.

She estimates that 20 percent of Australia’s population is under “mortgage stress,” a concern when lending rates are at historically low levels.

Mortgage stress is defined as paying 30% of household income in mortgage payments.

“An underlying concern is that when interest rates eventually rise, heavily indebted households will need to be able to continue repaying their loans, even though rate increases are expected to be gradual,” she said.

The RBA has repeatedly stated that interest rates will not rise until inflation is durably within the 2-3% inflation target, an event it does not expect to occur. produce before 2024 at the earliest.

However, economists are increasingly speculating that this could be brought forward to 2023 or even earlier, given the strength of the labor market which has seen the unemployment rate drop rapidly to 5.1%.

The financial comparison website Canstar noted that NAB has increased its fixed rates for two, three and four years up to 0.1 percent for homeowners.

“The increase in the NAB… is further confirmation that the markets expect rates to move within the Reserve Bank’s three-year timeline,” said Steve Mickenbecker of Canstar.

Fixed rate loans are valued against the bond market rate rather than the RBA cash rate which influences variable mortgage rates.

Associated Australian Press

Source link

Leave A Reply

Your email address will not be published.