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Investor housing loans struggle to grow as APRA’s crackdown on higher risk lending continues. The latest figures released by APRA and RBA separately yesterday show investor loans hardly grew in January.
APRA’s monthly banking data shows that investor loans increased weakly by 0.04% to $553.3bn in January from December, while owner-occupied loans went up 0.6% to $1.05tn.
RBA’s figures show slightly stronger growth – with investor lending going up by 0.2% over the previous month and by 3.2% from a year ago, both in seasonally adjusted terms. Owner-occupied lending rose by 0.6% in January and was up by 8% over the previous year.
Total housing loans stood at $1.6tn in January, up by $6.2bn from the previous month, according to APRA’s statistics. In RBA’s data, housing loans grew 0.5% in January after a gain of 0.4% the previous month, but annual growth eased from 6.4% in January 2017 to 6.2% last month.
Slower growth in mortgage lending does not come as a surprise amid tougher lending practices and lower investor demand. Besides added restrictions on lending, borrowers also face stricter loan serviceability criteria and approval process, limiting their access to mortgage products.
Zooming in on APRA’s January figures for major banks, Westpac’s investment loans went up 0.3% or by $473m from December to reach $151bn in January. It is the only major bank that saw an uptick in investor housing loans and remains the biggest player in this type of lending.
For owner-occupied loans, all four recorded increases over the previous month, but their growth rates seem to have moderated. ANZ made the biggest growth at 0.6% to $174bn.
Owner-occupied loans (January 2018):
Investor housing loans (January 2018):
RBA said in a note that a number of borrowers changed the purpose of their existing loans following the introduction of an interest rate differential between investor housing loans and owner-occupied loans in mid-2015.
“Adjustments for these switching flows have been applied to the growth figures over the period from mid to late 2015 when this switching was unusually large, but not thereafter, as the amount of switching each month subsequently decreased and remained relatively stable (and thus appears to reflect regular behaviour that occurs from month to month),” said RBA.
“All switching flows are reflected in the level of owner-occupier and investor credit outstanding.”
