Borrow
Changing policy only way to slow housing market’s ‘up-crash’
Australia’s booming property market could be slowed through the use of regulatory powers rather than a central bank intervention, an economist has said.
Changing policy only way to slow housing market’s ‘up-crash’
Australia’s booming property market could be slowed through the use of regulatory powers rather than a central bank intervention, an economist has said.
According to UBS, the Australian property market is currently experiencing an ‘up-crash’, with the government’s Homebuilder subsidy and cheap credit prompting a spike in construction and larger debts for mortgage holders.
The investment bank said that given plans to appeal responsible lending laws, combined with existing government stimulus packages, markets could soar upwards of 10 per cent in 2021.
But according to UBS’ George Tharenou, macro-prudential policies could be used to stall the booming property market if the market continues its strong growth rate through to 2022.
“We expect housing credit growth of 5–6 per cent in the 21 calendar year, but credit growth could exceed these levels if the housing ‘up-crash’ continues,” Mr Tharenou said.
In his economics note to clients, Mr Tharenou said the Council of Financial Regulatory is keeping a close eye on the housing market and exploring things such as limits on investment property credit growth and on interest-only lending.
“APRA has introduced policies to curb risks in the banking sector by limiting mortgage lending to investment properties in the past,” Mr Tharenou warned investors.
“This policy was effective, with banks both limiting investment property approvals and reverting to pricing policies, increase variable rates to slow the investment property market.”
“Unfortunately, this also led to a large number of mortgages being ‘reclassified’ from investment property to owner-occupied, mainly at the customer’s request to avoid the higher interest rate,” he said.
The economist also flagged changes to loans on high loan-to-valuation lending and limits on loans with high debt-to-income ratios.
“We view macro-prudential tools as positive, helping to prevent housing from overheating and the RBA potentially being caught behind the curve,” Mr Tharenou said
UBS’ note follows ANZ CEO Shayne Elliott warning of the current housing boom that could go on for a while, despite threatening to create social and political issues.
“If you’re an owner, it probably feels pretty healthy. If you’re trying to get in, it probably doesn’t.
“I think extreme moves, either up or down, are never probably very good if they’re sustained for a period of time. So, it’s starting to get into that area where people are starting to raise a few eyebrows, wondering if it’s a bit unhealthy at these levels.”
“Certainly, it can’t keep going at sort of double-digit rates for very long because you start getting real social and political problems as a result. And nobody wants that,” Mr Elliott said.
RELATED ARTICLES
-
Australia’s credit pivot: Mortgage enquiries hit a three‑year peak as households lean on plastic — what lenders and fintechs must do next
-
Trust is the new yield: Why brokers win when credibility compounds
-
Mortgage Relief Window: How Australia’s Lenders Are Rewiring Risk and Growth at a Three‑Year Lull
About the author
About the author
Loans
Australia’s credit pivot: Mortgage enquiries hit a three‑year peak as households lean on plastic — what lenders and fintechs must do next
Australian home loan interest has rebounded even as households lean harder on cards and personal loans — a classic late‑cycle signal that demands sharper risk, pricing and AI executionRead more
Loans
Trust is the new yield: Why brokers win when credibility compounds
In a market where products look interchangeable, credibility has become the most defensible asset in mortgage broking. With broker channel share hitting record highs and AI reshaping client ...Read more
Loans
Mortgage Relief Window: How Australia’s Lenders Are Rewiring Risk and Growth at a Three‑Year Lull
Australia’s mortgage stress has eased to its lowest level since early 2023, creating a rare—likely brief—window for lenders, brokers and fintechs to reset risk and rebuild growth. This case study ...Read more
Loans
Why ANZ’s tougher stance on company-borrowed home loans matters: A case study in risk recalibration, competition, and what CFOs should do next
ANZ has tightened mortgage credit parameters for loans where a company or trust is the borrower—an apparently narrow policy tweak with wide operational consequences. It signals a broader recalibration ...Read more
Loans
Mortgage 2026: Australia’s share‑of‑wallet war will be won on switching, data rights and AI discipline
The defining feature of Australia’s 2026 mortgage market won’t be house prices; it will be switching velocity. With competition reforms sharpening the Consumer Data Right, lenders and brokers that ...Read more
Loans
Mortgage remorse reshapes the game: Australia's lending squeeze set to redefine banking and household demand
A growing cohort of Australians is rethinking recent home loan decisions as higher repayments collide with household budgets. This isn’t just consumer angst; it’s an economy-wide red flag for lenders, ...Read more
Loans
Aussie mortgage game-changer: Brokers dominate while AI sharpens the edge
Mortgage brokers now originate roughly three in four new Australian home loans, a structural shift that rewires bank economics, product strategy and customer acquisition. MFAA data shows broker market ...Read more
Loans
Fixing the future: How brokers and lenders can turn rate-hike anxiety into strategic advantage
Australian borrowers are leaning into short-term fixed loans as rate uncertainty lingers, shifting risk from households to lenders and their funding partners. That creates a narrow window for broker ...Read more
Loans
Australia’s credit pivot: Mortgage enquiries hit a three‑year peak as households lean on plastic — what lenders and fintechs must do next
Australian home loan interest has rebounded even as households lean harder on cards and personal loans — a classic late‑cycle signal that demands sharper risk, pricing and AI executionRead more
Loans
Trust is the new yield: Why brokers win when credibility compounds
In a market where products look interchangeable, credibility has become the most defensible asset in mortgage broking. With broker channel share hitting record highs and AI reshaping client ...Read more
Loans
Mortgage Relief Window: How Australia’s Lenders Are Rewiring Risk and Growth at a Three‑Year Lull
Australia’s mortgage stress has eased to its lowest level since early 2023, creating a rare—likely brief—window for lenders, brokers and fintechs to reset risk and rebuild growth. This case study ...Read more
Loans
Why ANZ’s tougher stance on company-borrowed home loans matters: A case study in risk recalibration, competition, and what CFOs should do next
ANZ has tightened mortgage credit parameters for loans where a company or trust is the borrower—an apparently narrow policy tweak with wide operational consequences. It signals a broader recalibration ...Read more
Loans
Mortgage 2026: Australia’s share‑of‑wallet war will be won on switching, data rights and AI discipline
The defining feature of Australia’s 2026 mortgage market won’t be house prices; it will be switching velocity. With competition reforms sharpening the Consumer Data Right, lenders and brokers that ...Read more
Loans
Mortgage remorse reshapes the game: Australia's lending squeeze set to redefine banking and household demand
A growing cohort of Australians is rethinking recent home loan decisions as higher repayments collide with household budgets. This isn’t just consumer angst; it’s an economy-wide red flag for lenders, ...Read more
Loans
Aussie mortgage game-changer: Brokers dominate while AI sharpens the edge
Mortgage brokers now originate roughly three in four new Australian home loans, a structural shift that rewires bank economics, product strategy and customer acquisition. MFAA data shows broker market ...Read more
Loans
Fixing the future: How brokers and lenders can turn rate-hike anxiety into strategic advantage
Australian borrowers are leaning into short-term fixed loans as rate uncertainty lingers, shifting risk from households to lenders and their funding partners. That creates a narrow window for broker ...Read more
