Invest
Bad news for overcommitted property investors
Lending watchdog APRA has today announced extra measures to monitor Australian mortgage lending, increasing pressure on stretched property investors in “an environment of heightened risks”.

Bad news for overcommitted property investors
Lending watchdog APRA has today announced extra measures to monitor Australian mortgage lending, increasing pressure on stretched property investors in “an environment of heightened risks”.

APRA advised all authorised deposit-taking institutions (ADIs) to limit the flow of new interest-only lending to 30 per cent of total new residential mortgages and limit investor lending to remain under 10 per cent growth.
In addition, APRA said it expects lenders to ensure their interest rates, net incomes buffers and other serviceability metrics are appropriate, as well as restrain higher risk lending growth, such as loans with high loan-to-income rations, high loan-to-value ratios (LVRs) and extra-long terms.
“APRA expects ADIs to target a level of investor lending growth that allows them to comfortably manage normal monthly volatility in lending flows without exceeding this benchmark level,” APRA chairman Wayne Byres said.
“APRA views a higher proportion of interest-only lending in the current environment to be indicative of a higher risk profile. We will therefore be monitoring the share of interest-only lending within total new mortgage lending for each ADI and will consider the need to impose additional requirements on an ADI when the proportion of new lending on interest-only terms exceeds 30 per cent of total new mortgage lending,” Mr Byres said.
Loan providers will also be required to place internal limits on interest-only LVRs exceeding 80 per cent and be able to justify any exceeding 90 per cent.
Today’s measures build on those introduced at the end of 2014 aimed at improving the quality of new mortgage lending, and particularly moderating investor lending.
Following those announcements three years ago, auction rates fell to 50 per cent and price gains slowed.
Amid extraordinary price growth, the new string of measures may do the same to quell some of Australia’s heated property markets, especially in Sydney and Melbourne.
“This increased scrutiny has been in response to an environment of heightened risks, reflected in an environment of high housing prices, high and rising household indebtedness, subdued household income growth, historically low interest rates and strong competitive pressures,” APRA said in a statement.
“Given this environment, APRA has concluded that further steps to address risks that continue to build within the mortgage lending market are appropriate.”

Property
First home buyers brace for strengthening headwinds
While Australian first home buyers dominated the market in 2020, increasing their market share by 50.4 per cent in the past year, they're likely to face strengthening headwinds as prices soar. ...Read more

Property
Australia’s most popular rental suburbs revealed
Tenants should brace themselves for rental price hikes as tightening vacancy rates continue across the country, new research has revealed. ...Read more

Property
Australian home values rise at fastest rate in 17 years
Overall, Australian home values surged 2.1 per cent higher in February, the largest month-on-month change in CoreLogic’s national home value index since August 2003. ...Read more

Property
Housing finance records continue to tumble
Australian housing loan commitment has reached another record high in January, rising by 10.5 per cent in the last month alone, official figures show. ...Read more

Property
Detailed forecast: How will the capital cities perform in 2021?
With most of the property market finding its footing by the end of 2020, after the COVID-induced disruption, experts have grown optimistic about the future of real estate in a post-pandemic world. ...Read more

Property
‘Allowing super to be used for deposit will jack up house prices’
Capital city prices could soar if the backbenchers’ continued push to enable first home buyers to access their super to fund their home deposit is given the green light, a super lobby group has said...Read more

Property
Poor wage growth could impede home price growth
With wages growth at record-low levels, a property expert has warned that continuing low and flat wages could impede home price growth. ...Read more

Property
Negotiating a lower interest rate on your property loan
The banks are customer hungry, meaning they’re willing to offer increased discounts to new customers and apply these discounts to existing customer loans, a mortgage broker has said. ...Read more

Property
First home buyers brace for strengthening headwinds
While Australian first home buyers dominated the market in 2020, increasing their market share by 50.4 per cent in the past year, they're likely to face strengthening headwinds as prices soar. ...Read more

Property
Australia’s most popular rental suburbs revealed
Tenants should brace themselves for rental price hikes as tightening vacancy rates continue across the country, new research has revealed. ...Read more

Property
Australian home values rise at fastest rate in 17 years
Overall, Australian home values surged 2.1 per cent higher in February, the largest month-on-month change in CoreLogic’s national home value index since August 2003. ...Read more

Property
Housing finance records continue to tumble
Australian housing loan commitment has reached another record high in January, rising by 10.5 per cent in the last month alone, official figures show. ...Read more

Property
Detailed forecast: How will the capital cities perform in 2021?
With most of the property market finding its footing by the end of 2020, after the COVID-induced disruption, experts have grown optimistic about the future of real estate in a post-pandemic world. ...Read more

Property
‘Allowing super to be used for deposit will jack up house prices’
Capital city prices could soar if the backbenchers’ continued push to enable first home buyers to access their super to fund their home deposit is given the green light, a super lobby group has said...Read more

Property
Poor wage growth could impede home price growth
With wages growth at record-low levels, a property expert has warned that continuing low and flat wages could impede home price growth. ...Read more

Property
Negotiating a lower interest rate on your property loan
The banks are customer hungry, meaning they’re willing to offer increased discounts to new customers and apply these discounts to existing customer loans, a mortgage broker has said. ...Read more