New investment data highlight APRA’s ‘prudential concern’

APRA announced last month that it would be “further increasing the level of supervisory oversight on mortgage lending” in a bid to “reinforce sound residential mortgage lending practices”.

The banking regulator said one of its “specific areas of prudential concern” would be when lenders increase their investor lending by more than 10 per cent during a year.

While APRA said this does not necessarily indicate wrongdoing or warrant any action, it did state that investor growth above 10 per cent would be “an important risk indicator for APRA supervisors in considering the need for further action”.

According to the latest APRA banking statistics, eight third-party lenders increased their investor volumes by more than 10 per cent during the 12 months to 30 November 2014.

Macquarie Bank grew its investor lending by 81.8 per cent compared to owner-occupied lending growth of 61.0 per cent. 

ME Bank boosted investor lending by 39.1 per cent and its owner-occupied lending by 11.5 per cent.

Teachers Mutual Bank reported investor growth of 30.8 per cent and owner-occupied growth of 9.8 per cent, while P&N Bank reported growth of 25.5 per cent and 8.6 per cent respectively.

Bank of China enjoyed a 16.0 per cent investor rise but experienced a 6.1 per cent owner-occupied decline.

NAB’s investor and owner-occupied numbers were up 11.6 per cent and 7.0 per cent respectively, while Westpac rose 10.5 per cent and 4.9 per cent.

Suncorp Bank had 11.3 per cent investor growth alongside 4.9 per cent owner-occupied growth.

APRA told lenders last month that “prudential risks in the housing market appear to be increasing”, with strong mortgage competition “accentuating pressure on lending standards”.

“Against this backdrop, housing credit growth has accelerated, with lending to property investors particularly strong; the Reserve Bank of Australia has noted that this could be funding additional speculative activity in the market," the regulator said.

“These forces have contributed to strong house price growth, particularly when viewed against the more subdued growth in household incomes.”