subscribe to our newsletter

Reserve Bank highlights slowdown in housing credit

The minutes of the Reserve Bank of Australia’s most recent board meeting show that the board considered the recent slowdown in housing credit when making its cash rate decision.

According to the minutes from the Reserve Bank of Australia’s meeting on 5 December, the slowdown in lending activity seen in the past few months contributed to the central bank’s cash rate decision.

The RBA document, which was released this week, noted the “eased credit growth” in the second half of 2017, stating: “[Housing] credit growth had eased a little over the second half of 2017, as growth in lending to owner-occupiers had slowed somewhat and growth in lending to investors had stabilised at a lower level than in the first half of the year.”

The Reserve Bank went on to identify that the easing in housing credit growth had been accounted for by the major banks, which “had been more affected by the need to restrain interest-only lending to comply with the supervisory measures announced earlier in the year”, while growth in housing lending by non-authorised deposit-taking institutions (non-ADIs) had picked up (although these institutions’ share of overall housing lending remains small).

Members added that non-ADI lenders “charged higher interest rates on average than ADIs, which is likely to reflect both the borrower risk profile and higher funding costs of non-ADIs”.


The RBA also noted that while there had been a “strong” level of issuance of residential mortgage-backed securities (RMBS), pricing of these securities had declined a little.

Further, the central bank outlined that conditions had eased in the established housing market, most noticeably in Sydney, where housing prices had declined in prior months and auction clearance rates had fallen.

“Growth in household credit had slowed somewhat, but members agreed that household balance sheets still warranted careful monitoring,” the minutes said.

Moreover, the RBA’s board noted the difficulties that small businesses face when seeking to obtain finance to sustain or fund the growth of their business.

“[Many] small businesses continued to find it challenging to obtain finance, particularly in their start-up or expansion phases.”


The report concluded: “Taking account of the available information, the board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.”

[Related: New $1bn fund aims to help ‘unlock new housing supply’]

Reserve Bank highlights slowdown in housing credit

If you’re feeling overworked and overwhelmed in this fast-paced mortgage market, it’s time to make some changes, and the Business Accelerator Program can help! Early bird tickets are on sale now. Work smarter, not harder, this year.

Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

The prudential regulator has written to ADIs to ensure that they are proactively managing lending risks and focusing on lending standards am...

As it waits for APRA to approve its acquisition of MyLife MyFinance, Challenger has flagged plans to expand the bank’s lending remit to co...

Australia has the second-highest mortgage debt as a proportion of GDP among OECD nations, according to a new report. ...

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.