Lenders pile back into investor mortgages

From the AFR:

Lenders are offering new property investment deals that test the limits of the regulator’s 10 per cent speed bump, fuelling fears that recent rate cuts might be inflating a property bubble.

The warnings conflict with the Reserve Bank of Australia’s (RBA) assurances that the recent rebound in demand will not last.

Lenders are launching new offerings and repackaging products that were shelved after the Australian Prudential Regulation Authority (APRA) imposed a 10 per cent speed limit on annual investment growth in December 2014.

Brokers say an alternative strategy is for lenders to provide more-generous terms to borrowers and deals that they have confidence will comfortably meet terms and conditions.

…”It’s quite widespread amongst some of the largest lenders and second tier players. This is sufficient to keep home prices moving up and inflating the housing bubble,” said DFA principal Martin North.

“Demand appears very strong and now banks are willing, very willing to lend,” Mr North said.

Move APRA. Cut your investor limit to 5% NOW or watch the bubble re-inflate, the RBA choke back rate cuts, the dollar rally and the “rebalancing” stall.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.