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A leading non-bank lender has dropped rates across its range of alt-doc loans by 30bps
by Julia Corderoy from brokernews.com.au
The value of home loans held by property investors continued to expand at a quicker pace than the banking regulator's 10 per cent-a-year cap in May, new figures show.
Yet economists believe the boom in lending to landlords is probably near its peak, after recent moves by banks to put the brakes on housing investor loan growth.
Amid official concern about the rapid house price growth in Sydney especially, Reserve Bank figures on Tuesday showed housing investor credit growth remained at a seven year high of 10.4 per cent a year.
This compares with the 10 per cent-a-year speed limit on investor credit growth announced by the Australian Prudential Regulation Authority in December - though banks have vowed to slow their growth over the coming months to comply with the cap.
The $1.3 trillion home loan market is being closely watched by economists because it has played a key role in driving up property prices, sparking fears some markets may be overheated.
A surge in bank lending to property investors has helped fuel house prices, especially in Sydney, where dwelling prices rose 15 per cent in the last year, while Melbourne prices are also up 9 per cent in the year.
Tuesday's figures showed total housing credit growth - including the owner-occupier segment - also remained constant at 7.2 per cent a year.
The expansion occurred in the same month that the Commonwealth Bank, Westpac, ANZ and NAB all took steps to slow their lending to investors, including reducing the lucrative interest rate discounts offered to investors.
However, JP Morgan economist Ben Jarman said signs of a slowdown in new lending may not show up in RBA's numbers for a couple of months, because of a lag between loan commitments and the official data.
"We are expecting the credit data to start to pull back, particularly in investor housing, within a couple of months," he said.
Commonwealth Bank economist Michael Workman said that the yearly pace of housing investor credit had been flat for the past three months, suggesting APRA's changes were starting to have some impact.
"There are some early signs that the changes may be working and that monthly and annual investor housing credit growth may be at their peak in this cycle," he said.
Among the big lenders, Westpac, ANZ Bank and National Australia Bank all expanded their housing investor loan books at more than 10 per cent in the year to May, APRA data show.
NAB, which has the smallest home loan book of the major banks, has been growing quickest of the big four.
APRA's cap is not intended to control house prices, but to ensure banks make sound lending decisions.
Mr Workman said he did not think APRA's 10 per cent cap would have a major impact on the housing market, which was also being affected by the tax system and growing foreign investment in residential real estate.
He argued conditions for housing remained "favourable", citing very low interest rates, low levesl of unemployment, and a growing population.
"Investor interest in housing reflects the relative attractiveness of rental yields, and capital gains, in a low interest rate world," he said.
Source: Clancy Yeates
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