The significantly under-reported Australian Bureau of Statistics first home buyer figures could have a “serious impact” on lenders and push up interest rates, says a prominent aggregator head.
Last week, the ABS admitted it had made an error when calculating loans to first home buyers, leading it to revise its most recent data upwards by more than 25%.
The bureau said the investigation revealed a degree of under-reporting by some lenders on loans to first home buyers, which were not including figures for first home buyers who did not receive first home owner grants.
John Kolenda, managing director of 1300HomeLoan, says the ABS under-reporting had created a false impression that the home finance market was dominated by investors, which then prompted APRA
to talk about regulatory action.
has said one of its specific areas of prudential concern is when lenders increase their investor lending by more than 10% during a year,” he said.
says going above that threshold is not wrong or warranting action, it has indicated it will be an important risk indicator for APRA
supervisors when considering the need for further action.”
Any action by APRA
could see banks forced to stop lending to the investor market, or having to hold more capital aside if they continue to do so. Both outcomes, says Kolenda, have the potential to push up interest rates.
“This in turn would force banks, if they wish to continue lending to higher risk assets, to do so at a higher interest rate or otherwise face a backlash from their shareholders as their profitability and dividend payouts will fall,” he said.
“At the end of the day our regulators should have access to reliable and accurate data when forming policy decisions. Anything less than this is unacceptable and it may end up costing Australian home owners.”