Several lenders may have overreacted in their interest-only loan repricing that APRA’s crackdown on investor lending could turn the other way in the coming weeks.
The APRA has set new policies restricting interest-only loans to 30% of new residential mortgage lending and it has successfully done so. To slow down interest-only loans by property investors, the banks increased their rates for interest-only loans.
However, lenders may still have had a good margin between what they are lending and APRA’s cap after hiking the prices too sharply. If so, interest-only loans may come back very soon. Other lending products may have been filling the gap left by interest-only products.
Supply in Melbourne and Brisbane CBD may be more than the demand but there is still growth. House prices in Sydney, Melbourne and Brisbane may grow about 5% on an annual basis in the next 1 to 2 years and 20,000 housing units may be needed every year to accommodate the growing population.
According to Mortgage Choice, their loans have grown to a record $53.4 billion as have their settlements which rose to $12.3 billion in the year. Commission for new loans also increased to $75.1 million.
The biggest challenges for housing affordability are first-home buyers trying to get into the market and more infrastructure and investment needed to develop regional cities. The mortgage amount is often less than a rental fee so there could be a solution to getting more people out of renting and owning their own homes.
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