How might APRA’s intervention affect the property market?

The Property Council of Australia (PCA) relayed to the public that it understands the rationale behind APRA’s decision to increase interest buffers on home loan applications.

But, it has requested potential impacts be monitored into the new year before any further action to further tighten lending be considered.  

Property Council chief executive Ken Morrison expressed it as “vital” that the measures “do not sap broader market confidence during our economic recovery”. 

“This move comes when fiscal stimulus and the HomeBuilder effect are withdrawing from the economy, the successful transition out of lockdown of our two largest states has yet to occur, and net overseas migration is still negative.” 

He commented: “Strong housing construction has underpinned Australia’s economic resilience through the pandemic and supports more jobs per dollar spent than any other industry, and this should never be taken for granted.”  

That reasoning is why Mr Morrison has urged the government and the regulator “to keep a patient focus on the impacts of these changes until the new year and to target their communications accordingly”.

With more changes potentially on the horizon, Ms Owen also flagged it as “worth noting that this may not be the end of macro-prudential changes”.

She cited comments made by APRA’s chair Wayne Byres in his letter to lenders, in which he said APRA “would consider the need for further macro-prudential measures” if new mortgage lending on high debt-to-income ratios remains at high levels.

“Therefore, while the announcement may seem like a subtle change to housing lending conditions, there may be more tightening to come as the Council of Financial Regulators monitors trends in housing credit and household debt,” the researcher concluded.


Comments are closed