Lending reforms could delay next rate rise

The recent squeeze on investor lending is likely to cool the market but risk still remains in the system, according to ANZ.

A new memo by senior economist David Cannington and Australian economics co-head Felicity Emmett said the tightening of investor lending rules could slow growth in that sector of the market.

“The changes to investor housing lending practices are likely to have a marginal softening impact on housing sales and price growth,” according to the memo.

That will “give the Reserve Bank some breathing space to keep rates low to support a broadening of the non-mining recovery beyond housing”, it added.

The memo noted that a range of banks have recently removed discretionary discounts on housing investor interest rates and lowered investor LVRs.

It said that while the impact of these changes couldn’t be quantified, they would make investor lending more expensive and limit the supply of “somewhat-less-prudential” investor lending.

“According to APRA, more than 82 per cent of investor lending remains within APRA’s macroprudential growth target (not materially above 10 per cent),” the memo said.

“While a number of lenders are comfortably below this range (around 12 per cent of market share) and have scope to increase their exposure to housing investors, some lenders are tracking well above APRA’s macroprudential target growth range.”

The most recent APRA banking statistics, for March, revealed that nine lenders that service the third-party channel had annualised investor growth above 10 per cent.

They were Macquarie Bank with 79.4 per cent, Teachers Mutual Bank with 35.1 per cent, ME Bank with 32.4 per cent, P&N Bank with 26.5 per cent, NAB with 13.6 per cent, AMP Bank with 13.4 per cent, Suncorp Bank with 12.2 per cent and ANZ with 10.4 per cent.

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