Investor lending growth points to more tightening

There were a number of changes to investor housing loan prices and features over the past week and the lending data released on Friday suggests there will be more to come. Many lenders are still growing their investor loan portfolios above the ten per cent limit the Australian Prudential Regulation Authority has set.

According to the latest Reserve Bank lending figures, investor mortgage balances grew by one per cent in June compared with the previous month, and by 10.7 per cent over the 12 months to June.

The annual growth rate has picked up from 10.2 per cent in December, when the Australian Prudential Regulation Authority told authorised deposit-taking institutions that it did not want to see investor loan growth above ten per cent.

Owner-occupier loan balances grew by 0.4 per cent in June, compared with the previous month, and by 5.5 per cent over the 12 months to June.

Overall, housing finance balances grew by 0.6 per cent in June, compared with the previous month, and by 7.3 per cent over the 12 months to June.

APRA's figures show balances growing by 0.7 per cent in June, compared with the previous month, and by 7.7 per cent over the 12 months.

According to APRA, investor loan balances grew by 16.5 per cent over the 12 months to June but the APRA figures have been distorted by a reclassification of ANZ loans.

ANZ announced on Friday that as a result of a reclassification of loan purposes its investor loan balance went from A$60.4 billion reported in May to $83.5 billion in June.

Lenders whose investor lending portfolios grew above an annualised rate of ten per cent in June included AMP Bank, ANZ, Bank of Queensland, Commonwealth Bank, HSBC Bank Australia, Heritage Bank, ING, Macquarie BankDirect, ME, MyState, National Australia Bank, Teachers Mutual Bank and Westpac.

Among the changes lenders made to their investor housing finance conditions over the past couple of weeks, the big news was that AMP had stopped accepting applications for investor loans and increased the rates on outstanding loans.

Westpac capped the loan to valuation ratios on investor loans at 80 per cent. It also increased the introductory rate for investors on its Flexi First Option Home Loan.

Comparison site Mozo reported a number of other changes. Bankwest has also capped investor loan LVRs at 80 per cent and ING Direct has capped interest-only LVRs at 80 per cent.

CUA has dropped the LVR on its Fresh Start Loan from 80 per cent to 70 per cent for investors, as well as increasing the investor rate by 30 basis points.

ANZ, CBA, Heritage, Homestar, Macquarie, ME, Suncorp and UBank have all added rate premiums for investors.