APRA's loan efforts having effect
New loan approvals to landlords are down 16 per cent, suggesting APRA’s brakes are working.
The Australian Prudential Regulatory Authority (APRA) imposed tighter controls two years ago, forcing banks to rein in the high-loan-to valuation ratio (LVR) lending practices, introducing stricter affordability tests for borrowers and limiting interest-only loans with "very long" terms.
Since then, new investor loans have fallen from $38.6 billion in the 2014 December quarter to $33.2 billion, down 14 per cent.
In the same time, new owner-occupier loans being issued are up 14 per cent from $54.1 billion to $61.9 billion.
Easy loans, historically low interest rates and booming house prices combined to drive up new investor lending by almost 40 per cent between March 2013 and March 2014.
But despite the investor clamp down, APRA’s quarterly figures show the total residential exposure carried by financiers rose by 7.9 per cent over the year to a record high of $1.46 trillion.
Total owner-occupier loans were up 12.9 per cent to $949 million, or 65 per cent of all residential loans, while total investor loans slipped 0.2 per cent to $512 billion.
The average loan size increased from $244,000 to $255,000 over the year.