The effectiveness of the APRA
's investor lending intervention has been further illustrated by the release of lending figures by the watchdog for the March 2016 quarter.
According to analysis of the APRA
figures by CoreLogic
RP Data, at the end of March there was $906.7b worth of mortgages outstanding to owner occupiers and $501.3b outstanding to investors, with total lending up 8.7% compared to March 2015.
The average outstanding mortgage balance was recorded at $251,900 at the end of March 2016, having increased by 4.8% year-on-year.
While total lending is up by a relatively significant mark over the year, investor lending has risen by just 0.1% in the 12 months to March 2016 while owner occupier lending has jumped 14% over the same period.
At the end of March the value of investor outstanding investor loans was 3.2% below the peak levels reached in June 2015 and investors accounted for 35.6% of outstanding loans, down from the peak 39% also recorded in June 2015.
Over the March 2016 quarter alone, there was $81.7 worth of new mortgages written, which is the lowest quarterly total since the three months to March 2014.
Of that, $25.7b was issued to investors which is 25.5% lower than the value of new investor lending in the March 2015 quarter and is the quarterly value of new investor lending in three years.
New lending to owner occupiers was 16.1% higher in the March 2016 quarter compared to the March 2015 quarter.
research analyst Cameron Kusher
said the figures show investor demand for finance has moderated, however that could change now that lenders are meeting APRA
“The data indicates that there has been a significant pull-back in new lending to investors over recent quarters,” Kusher said.
“The data also indicates that investor credit growth now sits significantly below the APRA
imposed 10% pa speed limit. This could lead to a rebound in lending to investors over the coming quarters,” he said.
While lending to investors may bounce back, Kusher said the actions taken by lenders in response to APRA
s desire to rein in investor lending have had some benefit, with higher risk lending practices seemingly on the decline.
“Interest-only lending which APRA
and the Reserve bank have previously sounded warnings about is also starting to fall and is now at its lowest level since March 2013. Higher LVR lending which is associated with smaller deposits are also trending lower which indicates less risky lending,” he said.
“The added benefit surrounding lower LVRs is that if a borrower has a deposit of more than 20% of the value of the property they can typically avoid lenders mortgage insurance (LMI).
“These emerging trends can only be positives for the stability and security of the Australian mortgage lending market.”
According to the APRA
figures, the value of new lending for loans with LVRs above 90% fell 22.8% over the year to March 2016 and is at its lowest level since the March 2011 quarter.
Lending for LVRs above 80% represented 22.4% of all new lending in March 2016 which was its lowest proportion on record.
In the March 2016 quarter 34.9% of new lending was on an interest only basis, however value of new interest-only lending was the lowest since the March 2013 quarter.
Mortgages with offset facilities account for a record-high 43% of all outstanding mortgages at the end of March and the value of these mortgages has increased 20.4% year-on-year.