New APRA stats suggest drive to make banks ‘unquestionably strong’ is hitting FHBs and other struggling groups
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New APRA stats suggest drive to make banks ‘unquestionably strong’ is hitting FHBs and other struggling groups
Lending above 90% LVR has dropped by $4.2bn in 12 months, new statistics from APRA have revealed.
APRA’s Quarterly ADI Property Exposure data for March 2017 showed the volume of 90%+ LVR loans had decreased by 12% compared to March 2016 with a subsequent increase in the sub-80% LVR category (both for ADIs with more than $1bn in lending).
The data suggests that as banks react to APRA’s capital ratios – which demand banks hold more capital for higher LVR loans – first home buyers and other groups in need of high LVR loans are being hit. FHBs accounted for just 13.6% of dwellings financed in March 2017, only marginally improved from 12.9% the year before.
Huge challenge finding 20% deposit
Indeed APRA’s figures come just days after research by CoreLogic showed Sydney FHBs looking at relatively cheap units would need at least $79,733 to get together a 10% deposit and stamp duty. That figure was even higher for home owners, but lower in other states and does not include lenders mortgage insurance.
Should FHBs increasingly struggle to access high-LVR loans, more could be shut out of the housing market. If borrowers required a 20% deposit that figure rose to $133,733 for Sydney units and even in Hobart, Australia’s cheapest capital city, FHBs would still need $54,302.
CoreLogic analyst Cameron Kusher warned that “entry into the housing market remains a real challenge, particularly in our largest and most expensive capital cities. Even in cheaper areas, household income growth is fairly slow which makes saving a deposit difficult.”
Fall in low-doc lending
APRA’s figures suggest self-employed borrowers are also finding it increasingly difficult to access finance. The number of low-doc loans held by ADIs decreased by 14% from March 2016-March 2017 despite the number of residential loans rising by 4% in the same period. APRA’s figures do not include non-banks, however, many of whom specialise in low-doc lending options.
In other findings, investment loan approvals grew at a faster rate than owner-occupied loan approvals (4.8% compared to 3.1%), despite well-publicised moves by APRA to control the growth in investment lending.
Although APRA’s statistics don’t encompass the recent 30% growth cap on interest-only lending, APRA did find the value of IO lending actually decreased, by 3.6%, between March 2016 and March 2017.
Lending above 90% LVR has dropped by $4.2bn in 12 months, new statistics from APRA have revealed.
APRA’s Quarterly ADI Property Exposure data for March 2017 showed the volume of 90%+ LVR loans had decreased by 12% compared to March 2016 with a subsequent increase in the sub-80% LVR category (both for ADIs with more than $1bn in lending).
The data suggests that as banks react to APRA’s capital ratios – which demand banks hold more capital for higher LVR loans – first home buyers and other groups in need of high LVR loans are being hit. FHBs accounted for just 13.6% of dwellings financed in March 2017, only marginally improved from 12.9% the year before.
Huge challenge finding 20% deposit
Indeed APRA’s figures come just days after research by CoreLogic showed Sydney FHBs looking at relatively cheap units would need at least $79,733 to get together a 10% deposit and stamp duty. That figure was even higher for home owners, but lower in other states and does not include lenders mortgage insurance.
Should FHBs increasingly struggle to access high-LVR loans, more could be shut out of the housing market. If borrowers required a 20% deposit that figure rose to $133,733 for Sydney units and even in Hobart, Australia’s cheapest capital city, FHBs would still need $54,302.
CoreLogic analyst Cameron Kusher warned that “entry into the housing market remains a real challenge, particularly in our largest and most expensive capital cities. Even in cheaper areas, household income growth is fairly slow which makes saving a deposit difficult.”
Fall in low-doc lending
APRA’s figures suggest self-employed borrowers are also finding it increasingly difficult to access finance. The number of low-doc loans held by ADIs decreased by 14% from March 2016-March 2017 despite the number of residential loans rising by 4% in the same period. APRA’s figures do not include non-banks, however, many of whom specialise in low-doc lending options.
In other findings, investment loan approvals grew at a faster rate than owner-occupied loan approvals (4.8% compared to 3.1%), despite well-publicised moves by APRA to control the growth in investment lending.
Although APRA’s statistics don’t encompass the recent 30% growth cap on interest-only lending, APRA did find the value of IO lending actually decreased, by 3.6%, between March 2016 and March 2017.
