Residential lending dominates

What are APRA’s policies?

APRA implemented policies in 2017 to slow investor lending, in an attempt to address housing affordability. Policies require lenders to limit investor credit growth by 10 per cent per year. Interest only loans are capped at 30 per cent of total lending.

Investor lending growth is at a historic low.

Before the global financial crisis, investor credit accounted for about half of outstanding credit. Now, due to lending restrictions, investment lending is just over a third.

“The data shows a clear preference for lending for residential housing over recent years, especially when you consider at the end of 2007, just prior to the global financial crisis, housing accounted for a much lower 51.9 percent of the total outstanding credit,” says Cameron Kusher, CoreLogic RP Data head of research. “In fact, the share of credit to investors is at its lowest level since May 2013.”

The most recent RBA figures show that owner-occupier lending takes up a significant portion of the outstanding credit. “Overall, the expansion in housing credit is now largely being driven by the owner-occupier segment of the market,” says Kusher.

What future do investors face?

There is still room for investor lending to grow. Lenders have kept well below APRA’s restrictions, so growth is possible.

The direction lending takes, though, is yet to be seen.

“With mortgage rates expected to rise sometime over the next two years and dwelling values falling, it will be interesting to see how long the steady expansion in owner-occupier credit can last,” says Kusher.

Whether you are looking for a mortgage as an investor, or an owner-occupier, I can help you get you on the right track.