Regulators are set to comb through the mortgage books of Australian banks after the reclassification of billions of dollars-worth of home loans.
During a speech at the FINSIA Regulators Panel in Sydney earlier this week, Reserve Bank of Australia deputy governor Philip Lowe criticised Australian lenders after revisions of their home loan figures resulted in $50 billion worth mortgages being classed as loans to investors rather than owner occupiers.
“Over the past six months there have been very large upward revisions to the value of investor loans outstanding, with offsetting downward revisions to owner-occupier loans,” Dr Lowe said.
“The cumulative effect of the upward revisions has been to increase the stock of investor credit outstanding by around $50 billion, or 10%,” he said.
“It is disappointing that some lenders' internal systems have not been up to the task of reporting accurate data on the split between investor and owner-occupied housing loans.”
Dr Lowe said the RBA is expecting further reclassifications in the future, as borrowers incorrectly classed as investors seek to be considered owner occupiers in an attempt to avoid higher interest rates.
Dr Lowe said the reclassifications are a concern to the RBA and justify recent and future increased scrutiny placed on the level of investor lending.
“These various data problems have reinforced our view that the supervisory focus on investor lending has been entirely appropriate,” he said.
“This issue was discussed at the most recent meeting of the Council of Financial Regulators, with Council members considering what steps could be taken to improve the quality of data.
“Among other things, it has been decided that APRA, the RBA and the Australian Bureau of Statistics will, next year, undertake a thorough review of the data collected from authorised deposit-taking institutions regarding their domestic books.”
Do you have more than $120k in your super fund? You could use your super to buy property - Find out how
Top Suburbs :
Get help financing your investment
Do you need help finding the right loan for your investment?
When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.
Just fill in a few details below and we'll then arrange for a local expert Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus, our mortgage broking service is at no cost to you.
We value your privacy and treat all your information seriously - you can check out