Changes in investment lending
The Australian Prudential Regulation Authority (APRA) seem intent on it's goal of slowing growth in the investor housing market as changes in lending for investment properties come into effect.
APRA has said that lenders must slow annual investor credit growth to less than 10 per cent, meaning banks are capped at how much they can grow their investor portfolio.
The flow on effect is that lenders will compete for customers in other sectors, including owner-occupier and small business borrowers. This in turn could lead to bigger interest rate discounts for these customers.
In May, a wholesale lender owned by National Australia Bank (NAB) announced larger discounts for customers that intend to live in their property than new investors.
NAB's executive general manager of growth partnerships, Anthony Waldron told Fairfax Media: "We've got a bigger discount for owner-occupied lending than we have for investor lending. It's a direct response to us having a higher appetite for owner-occupied lending."
Mr Waldron went on to say that the discounts only applied to the bank's white label lending business, Advantedge, which sells loans through mortgage brokers under different brand names. The changes offer new owner-occupier borrowers a discount nearly 15 basis points larger than the discount for new investors.
Mr Waldron told Fairfax Media that he believed each lender would respond to APRA's 10 per cent growth cap differently.