A majority of respondents to a Mortgage Business survey feel higher rates for investor home loans would do little to cool the market.
Of the Mortgage Business readers who responded to the online poll, 47.7 per cent felt increasing the rates on investor loans would help slow credit growth by cooling investor demand, while 52. 3 per cent did not believe higher rates would curb investors.
APRA yesterday announced an investigation into mortgage lending, in conjunction with ASIC, which includes a probe into the provision of interest-only loans by Australian lenders.
ASIC claims that interest-only loans as a percentage of new housing loan approvals by banks reached a new high of 42.5 per cent in the September 2014 quarter (this includes owner-occupied and housing investment loans).
While APRA is not currently considering introducing macroprudential tools, the consensus among senior bank figures prior to yesterday’s announcement was that property investors would be hit with higher rates.
CBA securitisation analyst Tally Dewan pointed out that both the RBA and APRA have repeatedly said there is no empirical evidence to suggest that macroprudential tools actually work.
“However, at the senate committee the RBA did say that it is in talks with APRA about possibly implementing tools," Ms Dewan said.
“Any interest rate buffers or risk weights applied to investor loans would be their likely choice.”
HSBC chief economist Paul Bloxham described APRA's announcement as a form of incremental change rather than a wholesale rethink of prudential policy.
"APRA has been gradually turning up the dial in terms of its prudential settings for residential mortgages and this is another step along the way," Mr Bloxham said, adding that Australia was experiencing a "normal-looking house price cycle" and that there was no evidence to suggest there had been an excessive rise in high-LVR lending.
"The strongest part in the growth in lending that's going on at the moment has been the growth in lending to investors," he said.
"Typically, investors have lower LVRs than first home buyers because they have more equity. So actually we haven't seen that this housing boom has been driven by lots of high-LVR loans."