Depends what they are strongy1986.
By the looks of it, we can rule out LVR ratios or any highly restrictive tightening. Byre's comments at the Senate all but ruled that out. RBA don't appear to like it either.
APRA are likely to turn the dial up a notch or two before going to those extremes. NZ went there because it made much more sense to do so, Australia doesnt really have a problem with high LVR lending.
Its more the 'amortisation' of investment loans - theyre not being repaid down that'll be worrying the regulators. People may be relying on debt deflation. That causes worry for regulators - who don't like speculative investment behaviour.
Using some numbers, investors make up 50% of all new home loans. Contrast this to Australia having a 70/30 PPOR/Rental split thats been fairly still for nearly 3decades. There's an imbalance there...(this will have short run effects on rental prices which are feeding through the Sydney and Melbourne now).
Interest only loans are now 40%+ of all new lending. Most of this is in Sydney and Melbourne. Balancing this, credit growth for investors is barely above 10% - nothing really alarming.
I think it would be very un-Australian policymaking to target segments based on regions.
Personally, i rekon they'll just make banks hold more capital for interest only loans. If they do, they're effectively incentivising banks to promote P&I repayments, or face increased rates for IO loans. Reading into NAB's recent P&I policy ($1000 rebates) is probably APRA incentivised.
Someone may know better than me on this - but they did something similar durign the 2002-2004 boom (when investor credit growth was 30%).
What effect would that have? It may reduce serviceability around the margins and tighten lending condtions - but i doubt it'd be a long term structural drag on the housing market.
So far, i think whats happened is all part of the cycle. Its not out of hand yet - but APRA have their finger on the pulse watching whats happening in the lending market and have a few tools ready to go.
Red
