The latest figures from the Reserve Bank of Australia (RBA
) have revealed significant movement between investor and owner occupier mortgages in the market.
Between July 2015 and April 2017, the RBA estimates the net value of loans switching between investor and owner occupier to be $52bn. In April this year alone, $1.1bn was moved between these loan types.
A number of borrowers have changed the purpose of their loans following the “introduction of an interest rate differential between housing loans to investors and owner occupiers in mid-2015,” the bank said.
Total credit grew by 0.4% over the month of April and by 4.9% during the 12 months prior to this. At the same time, housing credit rose by 0.5% throughout the month and 6.5% throughout the year before.
On the other hand, personal credit growth fell by 0.1% in April and by 1.5% in the 12 months prior.
“The Reserve Bank may fret that housing debt is exceeding that of wages, but that is only part of the story. Consumers are trimming other debt, including personal loans and credit card debt,” said Craig James, chief economist at CommSec.
“Margin loans are out of favour despite low interest rates, low sharemarket volatility and healthy returns on investments. The issue for banks is that inflows of cash are growing at a faster rate than outflows, putting pressure on margins, profitability and potentially dividends.”
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