Heat out of the housing market
Although the cash rate has remained on hold for a consecutive 27 months, Corelogic head of research Tim Lawless said it’s important to note mortgage rates to investors are up as much as fifty-basis points for the same period.
“That’s the equivalent of two cash rate hikes, and variable rates for owner-occupiers have increased by fifteen-basis points over the past two months alone,” Lawless said.
“The rise in mortgage rates, particularly for investors who are now paying a 55-basis point premium over owner-occupiers, together with tighter lending conditions more broadly, has been a key factor in taking the heat out of the housing market.”
Murray believes APRA’s interventions to curb growth on risky lending was appropriate at the time of implementation, subsequently “cooling the housing market” but says the slowdown now has “its own momentum and does not need additional assistance from the regulator”.
Recent figures published by the RBA show that growth in housing credit to investors has dropped to new lows, with owner-occupier lending growth also now slowing.
“We have already seen the speed limit on investor lending dropped but other restrictions remain,” Murray said.
“It will be important for the RBA, APRA and the federal government to monitor developments in the housing market and ensure that we have appropriate policy settings to ride out the cyclical downturn smoothly.”