RBA concerned at inaccuracy of housing lending data by banks
The RBA is unhappy with banks' data relating to owner-occupier and investor housing loans, with RBA deputy governor Philip Lowe saying it has complicated its understanding of Australia's housing market.
Speaking at a FINSIA regulators' panel in Sydney on Thursday, Lowe reinforced the need for thorough regulatory oversight after an additional $50 billion of property investor loans was found on the books of banks.
"Over the past six months there have been very large upward revisions to the value of investor loans outstanding, with offsetting downward revisions to owner-occupier loans," he said.
"The cumulative effect of the upward revisions has been to increase the stock of investor credit outstanding by around $50 billion, or 10 percent. According to these new data, investor loans now account for 40 percent of total housing loans outstanding, not the 35 percent reported earlier in the year."
He said the data problems have emerged as lenders have taken a closer look at their housing loans following increased regulatory scrutiny. He highlighted two issues specifically.
While the reasons for some of these earlier errors have been identified, in other cases the reasons are unclear and lenders have not been able to provide comprehensive back data. As a result, when calculating growth rates for investor and owner-occupier credit, the RBA has had to make adjustments for what are effectively breaks in the series, he said.
The second issue was with lenders reporting that some loans previously recorded as investor loans were really loans to owner-occupiers.
"This is partly because, when faced with the higher interest rate on investor loans, some borrowers have indicated to their bank that they are not an investor, but rather an owner-occupier, and so should not have to pay the higher rate.
"Taken at face value, the data suggest a very sharp slowing in growth in investor credit and a sharp pick-up in owner-occupier credit. However, if we make adjustments for these reclassifications then the changes in growth rates are much less pronounced.
"These various data problems have reinforced our view that the supervisory focus on investor lending has been entirely appropriate. And it is disappointing that some lenders' internal systems have not been up to the task of reporting accurate data on the split between investor and owner-occupied housing loans.
He said it has been decided that APRA, the RBA and the Australian Bureau of Statistics will, next year, undertake a thorough review of the data collected from authorised deposit-taking institutions regarding their domestic books.