RBA makes final cash rate call for this financial year
The Reserve Bank of Australia has made its last call on the official cash rate for this financial year. ...
New data from APRA shows a smaller number of people are taking interest-only loans, a move described by an expert as a “colossal turnaround” by the banks.
Data from APRA’s September Quarterly ADI Property Exposures indicate interest-only loans have declined to 16.91 per cent, down 44.84 per cent over the quarter, a historic low. Likewise, the big four banks have declined the number of new interest only loans to 16.69 per cent, down 48.65 per cent over the quarter.
Currently, 35.35 per cent of all loans are interest-only.
Sally Tindall, RateCity’s money editor, said these results are a win for APRA after the regulator demanded banks to limit new interest-only to 30 per cent of all new lending.
“Today’s data is a slam dunk for APRA,” Ms Tindall said.
“This has been a colossal turnaround in the way banks view interest-only terms. In June 2015, 45.65 per cent of all new loans approved by banks were interest-only. Today this has been reduced to under 17 per cent.
“The RBA will also be relieved to see people committing to paying down their debt. Our household debt to income ratio is at a record high. This move away from interest-only lending should help bring this ratio down to more realistic levels.”
RateCity data reveals the average interest-only loan is approximately 30 to 35 basis points higher, but this has not caused existing borrowers to start paying their debt.
The average home loan interest rates by borrower type, according to RateCity, are:
|Investor, principal and interest||4.78%|
|Owner-occupier, principal and interest||4.33%|