Investor lending hit by biggest monthly decline since 2008

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Higher interest rates and stricter lending policies seem to be having an effect on the Australian lending market, with the latest lending figures from the Australian Bureau of Statistics (ABS) showing  lending to investors hit a wall during September.
 
According to the ABS figures, lending to investors only reached $12.3 billion in September, an 8.5% monthly drop from the $13.5 billion investors borrowed in August.
 
The September sum is the lowest amount of money lent to investors since August this year and the 8.5% decrease is the biggest monthly decline since August 2008, when investor lending declined 9%.
 
While much has been made of banks recently raising interest rates and altering lending criteria for investors in the wake of the Australian Prudential Regulation Authority (APRA) crackdown, the September slowdown still came as a surprise for some.
 
“It’s definitely a bit surprising. It [investor lending] was always going to come back down after rising for so long. The last 12 months have just seen it grow and grow, but a fall like that is still a bit of shock,” Joe Sirianni, director of broking firm Smartline, said.
 
“No doubt it’s a result of the moves by APRA and the other regulators. They had a deliberate strategy and the changes made it harder for investors to borrow and it definitely seems to have pulled it back,” Sirianni said.
 
The APRA crackdown was designed to restrict the growth of investor lending to no more than 10% per year, and earlier figures show that goal may be in sight. Sirianni said that is noticeable in how lenders are behaving.
 
“You compare now to five or six months ago and things are very different. Then a lot of lenders were being very careful about how they were lending. Now we’re seeing a few reposition themselves and go after a bit more business,” he said.
 
“One lender has recently moved their deposit requirement back towards 10% and I think we’ll see a bit more of that now that it’s all cooled down a bit.”
 

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