Investor Loans

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<div>It certainly seems that way.</div>
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<div>New South Wales investor loans burned 49 percent higher than a year earlier in January as investors chase Sydney property prices higher.<br><br>
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<div>In Victoria, investor loans were up by 35 percent, with Melbourne dwelling prices also rising. </div>
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<div>On the flip side, the value of investor loans in Western Australia was down by 16 percent year-on-year. </div>
<p><a href="https://www.propertyobserver.com.au/images/2017/03/16/A1.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/03/16/A1.jpg" alt=""></p>
<p>In Darwin and the Northern Territory, meanwhile, the value of investor loans has dropped to the lowest level in a decade.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/03/16/A2.jpg" target="_blank">Click to enlarge</a></p>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/03/16/A2.jpg" alt=""></div>
<p><br><span>Such can be the reflexive nature of markets.</span><br><br><strong><span style="text-decoration: underline;">Total lending pulls back</span></strong></p>
<div>Overall, January wasn't a particularly strong month for total lending according to the Australian Bureau of Statistics (ABS), with a decline in commercial lending in the month. </div>
<p><a href="https://www.propertyobserver.com.au/images/2017/03/16/A3.jpg" target="_blank">Click to enlarge</a></p>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/03/16/A3.jpg" alt=""></div>
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<div>After a recent spike in November - a near record month - total lending pulled back quite sharply at the beginning of 2017.<br><br>In fact, the result for total lending at $67.6 billion was a 5-month low. </div>
<p><a href="https://www.propertyobserver.com.au/images/2017/03/16/A4.jpg" target="_blank">Click to enlarge</a></p>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/03/16/A4.jpg" alt=""></div>
<p><span>Meanwhile, investors pile into Sydney and Melbourne, fearful of changes being made to legislation.</span></p>
<p class="p1"><span class="s1">PETE WARGENT is the co-founder of <a href="https://allenwargent.com/"><span class="s2">AllenWargent</span></a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/"><span class="s2">blogger</span></a>.</span></p>
<p class="p2"><span class="s3"><em>His latest book is </em><a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx"><span class="s2"><em>Four Green Houses and a Red Hotel</em></span></a><em>.</em></span></p>
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pwargent-M4siyDbqQY

Rising prices beget more buyers?

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<p>A quick look at half a dozen of the more interesting housing finance slides for January 2018.</p>
<p>Total housing finance increased by +0.7% in seasonally adjusted terms to $33 billion, but was pretty flat in trend terms, with investor loans continuing to decline and owner-occupier lending growing at +7% per annum to fill the breach.</p>
<p>Click here <a href="https://3.bp.blogspot.com/-M24lH5yOIb0/WqdKC1BohRI/AAAAAAAAo3Y/uStoaGTkvc0KHaEzNHMWx4EbCygq9IxBACEwYBhgL/s640/HF4.jpg" target="_blank">to enlarge. </a></p>
<p><img src="https://3.bp.blogspot.com/-M24lH5yOIb0/WqdKC1BohRI/AAAAAAAAo3Y/uStoaGTkvc0KHaEzNHMWx4EbCygq9IxBACEwYBhgL/s640/HF4.jpg" width="640" height="376" data-original-height="812" data-original-width="1377"></p>
<p>January is generally a quiet month due to summer holidays, but first homebuyers continue to be drawn into the market by concessions, now accounting for a market share of 18% in the month. </p>
<p>Click here <a href="https://4.bp.blogspot.com/-ag8KiMutZ-8/WqdLJLhxNrI/AAAAAAAAo4A/3-pDL-QN38ITRbwAKoRjKZRiNWwSYJ3xQCLcBGAs/s640/FHB.jpg" target="_blank">to enlarge.</a></p>
<p><img src="https://4.bp.blogspot.com/-ag8KiMutZ-8/WqdLJLhxNrI/AAAAAAAAo4A/3-pDL-QN38ITRbwAKoRjKZRiNWwSYJ3xQCLcBGAs/s640/FHB.jpg" width="640" height="382" data-original-height="818" data-original-width="1367"></p>
<p>While first homebuyers are on average struggling to increase their loan sizes due to serviceability caps and stress-testing at above 7% mortgage rates, established owners have been able to use more leverage. </p>
<p>Click here <a href="https://4.bp.blogspot.com/-ruSrZ6NBTT0/WqdKCqS0GnI/AAAAAAAAo3U/j7Bj1E2K1wI0ovyEfh9IzQ9JT_gqM0PqgCLcBGAs/s640/HF1.jpg" target="_blank">to enlarge.</a></p>
<p><img src="https://4.bp.blogspot.com/-ruSrZ6NBTT0/WqdKCqS0GnI/AAAAAAAAo3U/j7Bj1E2K1wI0ovyEfh9IzQ9JT_gqM0PqgCLcBGAs/s640/HF1.jpg" width="640" height="372" style="font-size: 12.16px;" data-original-height="809" data-original-width="1390"></p>
<p>That's especially true in Victoria where the average loan size for non-first homebuyers hit a record high. </p>
<p>Click here <a href="https://1.bp.blogspot.com/-J8LLXGMj_SM/WqdKCR0vYCI/AAAAAAAAo3Q/tt-VaLWXam0tMPaj2XM1cmbUe6deQYlQQCLcBGAs/s640/HF2.jpg" target="_blank">to enlarge.</a></p>
<p><img src="https://1.bp.blogspot.com/-J8LLXGMj_SM/WqdKCR0vYCI/AAAAAAAAo3Q/tt-VaLWXam0tMPaj2XM1cmbUe6deQYlQQCLcBGAs/s640/HF2.jpg" width="640" height="380" data-original-height="819" data-original-width="1377"></p>
<p><strong>Surge of completions</strong></p>
<p>A number of indicators have suggested that the Sydney market saw a huge number of dwelling completions in or around the final quarter of 2017, as construction activity now drops back from record highs and a spike in vacancy rates is observed. </p>
<p>The number of finance commitments for new dwellings is coming down off four-decade highs.</p>
<p>Click here <a href="https://2.bp.blogspot.com/-8h3hCJlrxJM/WqdKDkn_fDI/AAAAAAAAo3c/GJx-yaHcc0c2Eq7JbEfbZMNOUrViqXVdQCLcBGAs/s640/HF5.jpg" target="_blank">to enlarge.</a> </p>
<p><img src="https://2.bp.blogspot.com/-8h3hCJlrxJM/WqdKDkn_fDI/AAAAAAAAo3c/GJx-yaHcc0c2Eq7JbEfbZMNOUrViqXVdQCLcBGAs/s640/HF5.jpg" width="640" height="380" data-original-height="801" data-original-width="1342"></p>
<p>New South Wales has seen more new dwellings financed by homebuyers than ever before over a 12-month stretch, underscoring the point. </p>
<p>Click here <a href="https://3.bp.blogspot.com/-k9QfN15EP3s/WqdKEO_HtDI/AAAAAAAAo3g/_20z2zxy8N4Ik_9evFiPhEKP-GPba0g4QCLcBGAs/s640/HF6.jpg" target="_blank">to enlarge.</a></p>
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<img src="https://3.bp.blogspot.com/-k9QfN15EP3s/WqdKEO_HtDI/AAAAAAAAo3g/_20z2zxy8N4Ik_9evFiPhEKP-GPba0g4QCLcBGAs/s640/HF6.jpg" width="640" height="388" data-original-height="831" data-original-width="1364"><p><strong>The wrap</strong></p>
<p>Overall, if you piece this together with other figures out recently including from APRA, the stats point toward a surge in apartment completions in Sydney, and investor lending being quelled as first homebuyers are increasingly drawn into the market by stamp duty and other concessions.</p>
<p><span>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and </span><a href="https://petewargent.blogspot.com/" target="_blank">blogger</a><span>.</span></p>
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Investor loans in decline: Pete Wargent

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<p>EXPERT OBSERVATION</p>
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<div>The most timely JLL report showed that the residential construction pipeline is now shrinking fast on tighter lending criteria for developers and investors.  </div>
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<div>In time this will inevitably lead to tighter rental vacancies, especially as we head into and beyond the traditionally busy Christmas and New Year period, with more Airbnb offerings also set to eat into the rental market through this cycle. </div>
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<div>With the greatest volume of apartment construction through this cycle Sydney and Melbourne will be the last markets to know about the tightening (although when D-Day does come the presently record high population growth in these cities means that the tightening of rentals market may also be felt most acutely).</div>
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<div>We're already hearing more and more stories of failed or delayed settlements, so the slowing in supply could come about sooner than expected. </div>
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<div>The initial impacts will be felt in Hobart, Canberra, Adelaide, and an array of rental markets around regional Australia.</div>
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<div>Indeed, SQM's latest figures showed that rental vacancies had already fallen to the <a href="http://petewargent.blogspot.com/2018/11/lowest-vacancies-since-early-2014" target="_blank">lowest level since 2014</a> by the end of last month, so the process is well underway.</div>
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<div>The HIA forecast today in its National Outlook that housing starts will fall by more than 50,000 from the peak, noting (or lamenting) that:</div>
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<div>'APRA’s restrictions were designed to curb high risk lending practices but we are now seeing ordinary home buyers experience delays and constraints in accessing finance.'</div>
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<div>Note that all of this is before Labor's proposed changes to negative gearing come about, which were originally designed to slow investor activity in the raging hot markets of 2016. </div>
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<div><strong><span style="text-decoration: underline;">Arrivals hit record high</span></strong></div>
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<div>The ABS released its arrivals and departures figures for the month of September 2018 this morning, which showed permanent and long-term arrivals rising to 823,090 over the year to September. </div>
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<div>This represents an increase of 6 per cent from a year earlier, and is the highest figure on record for Australia (the equivalent figure around the time of the Sydney Olympics was about 300,000, which is a measure of just how popular migration to Australia has become).</div>
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<div>Short-term arrivals into Australia have also boomed in recent years, rising to a record high of 9.2 million in September. </div>
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<br>Interestingly the growth is no longer being driven by Chinese tourists, with a range of other countries picking up the mantle, including India.<br><br><div class="separator"><a href="https://2.bp.blogspot.com/-9e36O96FObc/W_IIPQ4rEKI/AAAAAAAAs8Y/sauXuXL3M88cp9P4W5h8nuuXZV_WA_JCgCLcBGAs/s1600/A2.jpg"><img src="https://2.bp.blogspot.com/-9e36O96FObc/W_IIPQ4rEKI/AAAAAAAAs8Y/sauXuXL3M88cp9P4W5h8nuuXZV_WA_JCgCLcBGAs/s640/A2.jpg" width="640" height="352" data-original-height="799" data-original-width="1447"></a></div>
<br>Education arrivals were also up by 5 per cent from a year earlier to a record high of 596,400.<br><br><div class="separator"><a href="https://2.bp.blogspot.com/-BeHBJ35BtQ0/W_IKs0Qkn9I/AAAAAAAAs8s/XzTDMdxiWHs0kmY8ed9iJjFEdByWn8HGgCLcBGAs/s1600/Education.jpg"><img src="https://2.bp.blogspot.com/-BeHBJ35BtQ0/W_IKs0Qkn9I/AAAAAAAAs8s/XzTDMdxiWHs0kmY8ed9iJjFEdByWn8HGgCLcBGAs/s640/Education.jpg" width="640" height="374" data-original-height="793" data-original-width="1357"></a></div>
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<div>Finally, at the state level short-term arrivals were up by 4 per cent in New South Wales to 3.45 million for the year to September, but growth was stronger in Victoria (up 8 per cent to 2.3 million) and Queensland (up 8 per cent to 2 million).</div>
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<div>
<a href="https://2.bp.blogspot.com/-BQ5Zsf2TBjQ/W_IIrT42XKI/AAAAAAAAs8g/vzjR8vNOBGA1kafBkeVaYabmGUZesD40gCLcBGAs/s1600/A4.jpg"><img src="https://2.bp.blogspot.com/-BQ5Zsf2TBjQ/W_IIrT42XKI/AAAAAAAAs8g/vzjR8vNOBGA1kafBkeVaYabmGUZesD40gCLcBGAs/s640/A4.jpg" width="640" height="358" data-original-height="797" data-original-width="1418"></a><br><br>Queensland was a little flattered here by the <a href="http://petewargent.blogspot.com/2018/04/gc2018hockey" target="_blank">Commonwealth Games XXI</a>, held at Gold Coast earlier this year...although that all seems like a long time ago now!<br><br><strong><span style="text-decoration: underline;">The wrap</span></strong><br><br>Both short- and long-term arrivals hit record highs for the year to September 2018, with accordingly significant implications for housing market demand over the year(s) ahead.<br><br>Australia's visa programme is tilted towards those aged under 30, so there are dramatic implications for rental market demand here as construction slows, as well as pent up demand for entrants to home ownership over the years ahead. </div>
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<div><em>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em></div>
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Rental vacancies to tighten: Pete Wargent

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<div>EXPERT OBSERVER</div>
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<div>OK, first things first. </div>
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<div>I am indeed a so-termed vested interest: I would like to see full employment, stronger wages and household income growth, the Aussie economy growing at least at trend or ideally above trend, and I don't want to see the housing market getting zinged unnecessarily. </div>
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<div>Yep, you got me on that one. </div>
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<div>With these formalities out of the way, I saw APRA's latest ADI exposures today described as 'red alert lending data', very 'concerning', a 'loosening' of lending standards, that should be 'ringing alarm bells' to APRA due to lenders 'breaking their own rules', among various other remarks (source: Digital Finance Analytics). </div>
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<div>For the record, while blog-flaming isn't really my bag, I must wholeheartedly disagree on each and every point!<br><br>Whatevs, I'll post a few deets and you can make your own mind up...</div>
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<div><strong><span style="text-decoration: underline;">Stock of IO loans plunges</span></strong></div>
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<div>Firstly, the flow of new interest-only (IO) loans in Q2 2018 was a meagre 16.6 per cent of residential term loans, absolutely miles below the initially proposed cap of 30 per cent (and a world apart from the 45.6 per cent record high of Q2 2015). </div>
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<div>With far fewer loans written overall from a year earlier in spite of a strong increase in the Aussie population, this represented a modest increase in percentage terms from the preceding quarter.</div>
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<div>However, the actual number of interest-only loans was some 52 per cent lower than in the corresponding quarter of the prior year - and almost 70 per cent lower than the number written at the peak of IO lending in 2015.</div>
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<div>A 'loosening'? Hardly.<br><br>But even if more IO loans were to be written henceforth I personally don't believe that would be <span>a bad thing.</span>
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<div><span>The last thing<span> we need <span>is $½ trilli</span>on of IO</span> mortgages being reset with undue haste - unless you actually want to see the housing market get stiffed, which of course many people do - and some breathing space would surely be welcomed by a portion of existing IO borrowers. </span></div>
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<div>Regardless of your views on that, there was another enormous decline in the stock of IO loans in the June quarter, with IO loan balances outstanding now having plunged some $119 billion lower over the past five quarters. </div>
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<div>The share of IO loans outstanding through June 2018 was thus by some margin at the lowest level across the entire data series at about 29 per cent, down from close to 40 per cent in late 2015. </div>
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<div>Note that these numbers only run to the end of the 2018 financial year; at the current trajectory the share of IO loans will likely be around 26.9 per cent by the end of this month, a figure that was truly unthinkable only last year, and the lowest level in decades. </div>
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<p><br><span>A loosening...very droll.</span><br><br></p>
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<strong><span style="text-decoration: underline;">Less and less and less high-LVR lending</span></strong><br><br>Secondly, in relation to DFA's 'red alert' on lending standards, the loan-to-value (LVR) ratios on new loans have been tightening incrementally for the better part of half a decade now.</div>
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<div>Loan volumes are down, there was a miniscule change in Q2 for the share of new loans written at 80 per cent LVR or above, while loans written above 90 per cent LVR or above have never been as low as they are today since the available records began.</div>
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<div>'Red alert'? You must be having a giraffe, surely - we've literally never seen lending standards remotely like it!</div>
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<div>Thirdly, low-doc and other non-standard loans are also tracking at the lowest level on record. </div>
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<div>Fourthly, the quarterly flow of new investment loans plunged by the best part of $5 billion year-on-year, so how you conclude a sudden loosening of standards from that I can't fathom (automatic red card for anyone directly comparing volumes from Q1 to Q2). </div>
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<div>And fifthly, a word that is devilishly hard to spell at the best of times, DFA cites loans approved outside serviceability, noting that these should be ringing 'alarm bells' to the regulator.</div>
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<div>Fair suck of the sauce bottle, mate, but this almost certainly represents a timing issue and reflects <em><strong>tighter</strong> </em>lending standards, not looser.</div>
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<div>You can't tell me with a straight face that banks are blithely waving through marginal or borderline applications and then willingly reporting them as such in the current lending environment. Not happenin'.</div>
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<div>'I could go on...', as Jon Culshaw's impersonation of Russell Crowe might drily observe.</div>
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<div>Due apologies for the apparent curtness, but this stuff has a tendency to be uncritically reported by rote, so someone needs to chime in with a few of these inconvenient actualities.<br><br>Much obliged. As you were :-)</div>
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Interest-only loans running at 70 per cent down on 2015 peak: Pete Wargent

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<div>As promised, a quick look around the traps at where APRA's cooling measures have slowed investor lending the hardest, and where some or all of the hot air is coming out of the investor market.</div>
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<div>New South Wales saw $5.6 billion of investor loans in September 2015, taking activity back down to the breached for the first time in December 2014 - though as I analysed here previously, owner-occupier lending has (apparently) soared to unprecedented heights in recent months, more than compensating for the decline.<br><br><span><span>Macroprudential measures undertaken to cool housing markets will inevitably have some unintended consequences, one of which may be that lenders demanding high returns on target potential borrowers with existing equity, which in a curiously reflexive manner might temporarily skew lending towards markets which have already outperformed through the cycle (i.e. Sydney).</span></span><br><span><span><br></span></span><span><span>That's one to watch for next year, but for now total lending for NSW housing of more than $14 billion in September was the biggest month on record, even if the numbers were somewhat fishy.</span></span>
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<div><a href="/images/2015/11/17/A1-1.jpg" target="_blank"><span><span>Click to enlarge</span></span></a></div>
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<div>It's a near-identical story in Victoria, with a notable decline in investor lending, but a corresponding leap in owner-occupier lending.</div>
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<div><a href="/images/2015/11/17/A2.jpg" target="_blank">Click to enlarge</a></div>
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<span>In Queensland the decline in investor lending has been relatively marked from $2.0 billion in March, although there was a slight rebound in September to $1.67 billion. A spirited increase in owner-occupier lending means that total lending has increased moderately over the past year.</span><br><br><span>Queensland's property markets are something of a multi-speed affair, with certain areas of SEQ - such as some sub sub-regions within Brisbane and the Gold Coast - faring relatively well, but many regional markets decidedly in the doldrums. </span>
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<div><span>Not much in the way of good news to report for Western Australia, with investor lending tailing off sharply in recent months from $1.26 billion in December 2014 to just $0.82 billion in September 2015.</span></div>
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<div>It hasn't been a great time for the South Australian economy in recent years, with the trend unemployment rate of 7.7% way above the national average of 6.1%, while employment growth has been non-existent for years now.<br><br>Fortunes for the state waned further this week when it was finally confirmed that Arrium will cut 250 jobs from its Whyalla steelworks, with further cuts expected from Alinta.</div>
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<br>Despite the ongoing labour market shock, South Australia is home to a number of relatively affordable property markets after so many years of lacklustre growth.<br><br>As such South Australia is also the one state where investor lending is actually in an uptrend on a 12mMA basis, with the $469 million in investor lending in September representing a solid increase on the prior year equivalent figure of $390 million.</div>
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<div><span>The outlook has been looking up for the economy and labour market of Tasmania lately, but a lack of existing equity in the market following no real dwelling price growth for close to a decade appears to have knocked the investor market for six, with volumes declining from a record high $86 million in June to only $60 million in September.</span></div>
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<div><span>The Australian Capital Territory (ACT) continues to meander along, with investor lending pulling back since June here too, declining from a record spike of $224 million to $142 billion.</span></div>
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<span>Finally, there are no positives at all to draw from this data series for the Northern Territory, where investor lending has all but collapsed over the past year from $122 million to $75 million.</span><br><br><span>With elevated vacancy rates and nose-diving rents, Darwin and other parts of the Top End are heading for a potentially sharp and long overdue property market correction.</span>
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<span>Overall, it has become clear that APRA's cooling measures have worked quickly and effectively, knocking out a good deal of riskier investor lending right across the board.</span><br><br><span>The property markets story for 2016 will largely be of to what extent lenders can push up the market share of owner-occupier loans in order to compensate for the evident decline in investor volumes.</span>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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APRA's traps and investor loans: Pete Wargent

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<p>NAB has cut the rate on its Base Variable Rate Special Offer for investors to bring the rate down to 3.09% for principal and interest loan repayments and 3.29% for interest only repayments.</p>
<p>These rates are well below the average variable rate investors say they are paying, with a recent Canstar survey finding investors are paying an average rate of 4.06%.</p>
<p><img src="https://www.urban.com.au/images/2020/8/13/NAB%20Investor%20Loan%20rates.JPG" alt=""></p>
<p>Canstar research shows that 16 lenders made cuts to 38 investment variable rates since July 1.</p>
<p>It comes as the latest ABS Lending Indicators data released last week pointed to a 8.1% rise in the value of new loan commitments to investors in June, but still down 6.1% on June 2019.</p>
<p>Canstar’s finance expert, Steve Mickenbecker said this is a sign that the banks are looking to entice investors.</p>
<p><img src="https://www.urban.com.au/images/2020/8/13/NAB%20Investor%20Loan%20rates%20BIG%204.JPG" alt=""></p>
<p>“The housing market has been in the doldrums and new lending to investors in particular is even lagging the owner occupied market, leaving lenders competing hard for the quality business that is available,” said Mickenbecker.</p>
<p>“With new investment demand flat, the race is on for market share of the refinance market, and investors are a tried and tested group being targeted by lenders."</p>
<p>“With investors saying they are paying rates around 4.06%, it’s time they looked at refinancing. The lowest variable rate in the market for investors right now is almost 1.5% lower at 2.59% and the lowest fixed rate is down to 2.29%,” he concluded.</p>
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j.ballantyne1990-6AQqhLzZaK

NAB cuts investment loan rates to lowest in Big 4

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<p>The Senate Economics Legislation Committee, Canberra have been given some charts which APRA chair Wayne Byres considered was helpful for any discussion on the house mortgage market.</p>
<p> <img src="https://www.urban.com.au/images/2018/3/1/20180301-OpeningStatement-8.png" alt=""></p>
<p>The APRA benchmark of no more than 30 per cent of new lending by Australian banks being on interest-only terms was not overly restrictive for borrowers who genuinely need the form of finance, APRA noted recently.</p>
<p>While roughly 1-in-3 loans granted can still be on an interest-only basis, APRA boss Wayne Byres advised last month that data for the last quarter of 2017 shows that only about 1-in-5 loans were interest-only.</p>
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<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/3/1/OpeningStatement-2.jpg" alt=""></p>
<p>Byres said it had required the major interest-only lenders to establish strategies that incentivise more borrowers to repay their principal.</p>
<p>"The industry has been quite successful in doing so:, and the number of interest-only loans with high LVRs continued to fall to quite low levels.</p>
<p>"All of that is positive for the quality of loan portfolios," he told the A50 Australian Economic Forum dinner.</p>
<p>"While the direction in asset quality is positive, we’re not declaring victory just yet.</p>
<p>"We still want to see that the improvements the industry has made are truly embedded into industry practice.</p>
<p>"And we can modify our interventions as more permanent measures come into play.</p>
<p>"That will include, amongst other things, further strengthening of borrower serviceability assessments by lenders, strengthened capital requirements for mortgage lending imposed by us, and comprehensive credit reporting being mandated by the Government.</p>
<p>"Through these initiatives, we are laying the platform to make sure prudent lending is maintained on an ongoing basis," he said.</p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/3/1/OpeningStatement-3.jpg" alt=""></p>
<p><span>Byres told yesterday's hearing APRA did not have any particular target for house prices.</span></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/3/1/OpeningStatement-4.jpg" alt=""></p>
<p data-reactid="55">A recent review of the financial sector by the Productivity Commission found the clamp-down on interest-only applications may have actually provided a windfall for the banks and a cost to taxpayers.</p>
<p data-reactid="57">Byres said he wasn't about to challenge the commission's calculation but said its view was oversimplified and believed there were other drivers at work.</p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/3/1/OpeningStatement-5.jpg" alt=""></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/3/1/OpeningStatement-6.jpg" alt=""></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/3/1/OpeningStatement-7.jpg" alt=""></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/3/1/OpeningStatement-8.jpg" alt=""></p>
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