Lenders switch focus from investors to homebuyers

Lenders switch focus from investors to homebuyers
Pete WargentDecember 17, 2020

 

APRA released its quarterly property exposure figures today for the period ended 30 September 2016.
 
If there has been a slowdown in lending, sheesh, it's hard to make out from the chart. 
 
Total domestic residential property exposures increased by +7.9 percent from a year ago to a new high of $1.46 trillion.
 
Exposures are now some +130 percent higher than they were in 2008.
 
The growth in exposure to investors has been stopped in its tracks, however, with new loans to investors down 14 per cent from a year ago. 
 
However, owner-occupier loans stepped in to breach the gap, with exposures rising by +12.9 percent over the year to September, and the value of new loans to homebuyers rising by some +14 percent. 
 
In short, lenders have switched focus from investors to homebuyers.
 


The regulator has taken a number of measures to limit riskier lending.
 
For example, loans of 90 percent or higher loan-to-value ratio (LVR) are now just 8.5 percent of the market, down from 22 percent in 2009. 
 
Thus, most borrowers are using substantial deposits, whether borrowed from parents or from existing loans (some may even be saving deposits, who knows?!). 
 
 
 

Low-doc loans and loans approved outside serviceability are also now a small segment of lending.
 
There has been a sharp pullback in the number and value of interest only loans over the past year, with this sector of the market dropping by 15 per cent from a year ago. 
 


Buried in the small print there were some upward revisions to previously reported interest only loans reported by one institution. 
 
While exposures to investors has decreased, there does not seem to be much clarity surrounding the categorisation of outstanding loans (as evidenced by previous revisions), and as such in aggregate there may be more investors in the market than implied.  
 
The average loan size over the year increased from $244,000 to $255,000. 
 

PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and blogger.

His latest book is Four Green Houses and a Red Hotel.

 

Pete Wargent

Pete Wargent is the co-founder of BuyersBuyers.com.au, offering affordable homebuying assistance to all Australians, and a best-selling author and blogger.

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