By loosening APRA’s macro-prudential measures and discounting recent mortgage rates, a surge of investor lending could occur, according to CoreLogic.
The latest housing finance figures from the Australian Bureau of Statistics show that the value of both owner-occupier (+0.5 per cent) and investor (+1.1 per cent) mortgages increased over the month of January.
However, owner-occupier mortgages were higher year-on-year (+4.4 per cent) while investor mortgages were down significantly (-12.1 per cent).
Meanwhile, fresh data from APRA showed that there was $15.272 billion worth of interest-only mortgages created over the December quarter — the lowest quarterly value of interest-only loans written on record (data dates back to March 2008).
“As a proportion of the $100.33 billion in mortgages written over the quarter, interest-only accounted for a historic low 15.2 per cent, which is down from 17.2 per cent over the September 2017 quarter,” CoreLogic research analyst Cameron Kusher said.
“This is substantially lower than the peak in new interest-only mortgages in June 2015 when they accounted for 45.6 per cent of all new mortgages over the quarter.
“While this all looks quite positive, the proportion of new interest-only mortgages remains well below APRA’s cap, which limits new interest-only lending to less than 30 per cent of the total value of lending.”
Although lenders are substantially lower than this benchmark, Mr Kusher noted that recent comments from APRA about potentially loosening some of the macro-prudential policies — specifically the 10 per cent cap of investor credit growth — and lenders cutting interest rates for investors and some interest-only products, could see demand reinflate.
The research analyst said: “Remember that investors, many of which have utilised interest-only mortgage, have been a major driver of growth in Sydney and Melbourne dwelling values over recent years. Just as values have stopped growing in each of these cities, the regulator is talking about relaxing some of the policies that have brought about the slowdown and lenders are reducing mortgage rates.
“The next few months and quarters of data will be very interesting to analyse to see how borrowers and lenders adjust to the ever-changing mortgage market and what impact this has on housing market activity and the pace of capital gains.”