An Australian lender has dismissed the Reserve Bank’s fears that investor loans are creating an ‘imbalanced’ mortgage market.
Speaking to Mortgage Business, Firstmac owner Kim Cannon said the growing number of investor loans being written is “nothing to worry about”.
“It’s just market forces,” Mr Cannon said, adding that the high proportion of investors in the Australian market reflects a greater cultural shift among the next generation of property buyers.
“I’m just wondering whether the culture of Australian people has changed totally and this next generation don’t want that quarter acre because nobody wants to live fifty miles out of the CBD,” he said.
In recent weeks the RBA has raised concerns about the rise in investor finance, specifically interest-only loans, for properties in Sydney and Melbourne.
“The RBA is very quick to talk about property bubbles and trying to avoid property bubbles and that we are seeing investor loans go through the roof over owner-occupied loans. But let’s go back in history a bit. My generation, my parent’s generation and my grandparent’s generation – the Australian dream was to own your quarter acre and bring up your family and grow your veggie garden and live like that.”
Mr Cannon questioned whether future generations of Australians will choose to build wealth in an owner-occupied home.
“Are we seeing the future of this generation saying they will build their wealth through savings, through investments and through building wealth smarter, rather than pouring it all into the family house?
“To me, there is a culture change going on and this is being missed by everybody,” he said.
Just as the global financial crisis changed the way banks did business and created an online culture among consumers, so too will the Australian property culture change, Mr Cannon said.
“Everybody is panicking about it and there is nothing really to panic about,” he said.
Mr Cannon’s comments come after the RBA flagged the potential for lending curbs to be introduced by APRA to cool the investor loan market, which now accounts for half of all new mortgage settlements.