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Interest-only crunch rings bell on house price rises

Tuesday, 29 August 2017

APRA is out with its quarterly ADI housing exposures and there are some encouraging signs for macrprudential 2.0. Total loans were still up 7% year on year and interest-only 6%. However, more recently, the trends have shifted sharply. Leading flows for the June quarter were only up 0.4% year on year. And interest only flows were down -16.7%.

That has left us with a mortgage stock that suddenly hit the brakes in July as interest-only volumes tanked towards the 30% cap:

And flows that firmly suggest more tightening will still be needed to reach the 30% target:

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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.