ANZ analysts note that Australia’s housing credit growth has remained subdued in this easing cycle (compared to other recent cycles) despite the dramatic turn in house prices since mid-2019 and the lift in new housing finance commitments.
“Lacklustre investor housing credit growth is the primary drag. APRA’s 2017 changes to interest-only loans is, we think, a significant contributing cause for the weak investor housing credit growth. That change considerably reduced the number of interest-only loans (as a share of all loans), which has led to a portion of housing debt that is being paid off faster than was previously the case.”
“The altered composition of housing credit means that, compared to two years ago, greater growth in new loans would be needed to achieve the same level of housing credit growth. We think this effect will continue to restrain housing credit from increasing sharply through the first half of this year, even though we expect the housing market to continue its recovery.”
“As the RBA’s focus is on the stock of debt, it is likely to remain relaxed about the policy implications of continued rapid price growth.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.