Leading lenders and brokers see signs of growth slowing to a modest 1-5% for new lending, a Deloitte report reveals... Non-major hikes investor rates...
Mortgage experts expect subdued market in 2017
A Deloitte Australian Mortgage roundtable report released yesterday has revealed predictions for the mortgage market in 2017 from the country's leading lenders and mortgage brokers.
They expect an increasingly personalised, subdued market, dominated by issues of availability and affordability, and international regulation and see signs of growth for new lending slowing to a 1-5%.
Co-author of the report and financial services partner James Hickey said, “Over the 12 months to December 2016, total new lending, including refinancing, was flat at $384 billion. This was the first year since 2012 that settlements did not grow.”
Hickey stated in the report the reasons for moderating settlement growth was due to:
1. APRA’s 10% lending benchmark for new annual growth to investors, which reduced lending to investors in 2015 and the first half of 2016 (although it has is grown since the second half of 2016)
2. Tighter serviceability criteria, particularly around non regular and offshore income sources, and borrowers’ capacity to repay in times of higher interest rates.
3. Greater pricing for risk, particularly for increased LVR lending, investor lending and interest only repayments.
4. More selective lending, such as reduced participation in certain parts of the market
ME hikes investor rates
ME yesterday announced an increase in its investor home loan reference rates by 25bps, effective 27 April 2017, for new and existing investor borrowers and will put ME’s standard variable rate for investor borrowers at 5.28% p.a.
The bank said the change was in light of increasing regulatory and compliance costs and to ensure the bank remains within investor lending growth limits.
It stated it will not increase the reference rate for any owner-occupier home loans.
A Deloitte Australian Mortgage roundtable report released yesterday has revealed predictions for the mortgage market in 2017 from the country's leading lenders and mortgage brokers.
They expect an increasingly personalised, subdued market, dominated by issues of availability and affordability, and international regulation and see signs of growth for new lending slowing to a 1-5%.
Co-author of the report and financial services partner James Hickey said, “Over the 12 months to December 2016, total new lending, including refinancing, was flat at $384 billion. This was the first year since 2012 that settlements did not grow.”
Hickey stated in the report the reasons for moderating settlement growth was due to:
1. APRA’s 10% lending benchmark for new annual growth to investors, which reduced lending to investors in 2015 and the first half of 2016 (although it has is grown since the second half of 2016)
2. Tighter serviceability criteria, particularly around non regular and offshore income sources, and borrowers’ capacity to repay in times of higher interest rates.
3. Greater pricing for risk, particularly for increased LVR lending, investor lending and interest only repayments.
4. More selective lending, such as reduced participation in certain parts of the market
ME hikes investor rates
ME yesterday announced an increase in its investor home loan reference rates by 25bps, effective 27 April 2017, for new and existing investor borrowers and will put ME’s standard variable rate for investor borrowers at 5.28% p.a.
The bank said the change was in light of increasing regulatory and compliance costs and to ensure the bank remains within investor lending growth limits.
It stated it will not increase the reference rate for any owner-occupier home loans.
