Research suggests investor lending has peaked

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Australia’s runaway levels of investor lending may have cooled according to new analysis of housing credit data.

The analysis carried out by CoreLogic RP Data of housing credit figures suggests that lending to Australian property investors peaked in June and will likely moderate to the 10% level of year-on-year growth mandated as acceptable by the Australian Prudential Regulation Authority (APRA).

According to CoreLogic RP Data research analyst Cameron Kusher, annual investor housing credit growth hit 11.1% in June, before dropping back to 10.8% in July, the lowest level of annual growth since March.

“Although it’s only one month of data, the latest housing credit data to July 2015 suggests that we may be finally set to see a slowing of investment credit growth,” Kusher said.

“In fact, the monthly investor housing credit data shows credit advanced by just 0.6% in July which was its lowest monthly increase since October 2013,” he said.

Along with mandating investment lending growth shouldn’t exceed the annual 10% limit, APRA also recently changed requirements around how much capital the big banks need to hold against their mortgage books and Kusher said these measures are having an effect.

“Investment segment lending data on the investment segment suggests that following recent changes to lending policies by Australian ADIs, lending to the investment segment of the market is set to slow further over the coming months,” he said.

“With mortgage rates remaining low we would anticipate the rate of growth will slow to around the 10% per annum benchmark, however this is unlikely to drop much further than that.”

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