One of the Big Four has cut the discount it offers on mortgages to landlords amid a regulatory crackdown... ASIC fears property bubble to burst… Consumer sentiment improves among mortgage holders...
Regulatory crackdown forces mortgage discount cut
National Australia Bank Ltd. cut the discount it offers on mortgages to landlords amid a regulatory crackdown on lenders to cool the housing market, according to a Bloomberg article.
The country’s fastest-growing mortgage lender expects growth in its investor home loans to start cooling from the quarter ending September as the interest-rate changes take effect, said Gavin Slater, group executive for personal banking.
“Banks are all starting to respond now,” Slater said in an interview with Bloomberg. “We have certainly tightened up on discretions on investor housing as compared to owner-occupiers,” he added, referring to the discounts on rates and other concessions that lenders grant to customers.
National Australia’s move follows the banking regulator’s call to slow growth in mortgages to landlords that sent home prices soaring. The Australian Prudential Regulation Authority urged lenders in December to limit mortgage growth to investors to 10 per cent annually, while the central bank has warned that speculation may lead home prices to drop.
ASIC fears property bubble to burst
ASIC has expressed concerns over rising house prices causing a property bubble, just as the Reserve Bank of New Zealand announced new restrictions on lending to investors in Auckland, according to an article from Your Investment Property Mag.
In an interview with the Australian Financial Review, ASIC Chairman Greg Medcraft warned that rising house prices in Sydney and Melbourne were showing signs of a property bubble.
“History shows that people don't know when they are in a bubble until it's over,” Medcraft told the AFR. “I am quite worried about the Sydney and Melbourne property markets. In housing, the long-term average income to average price ratio is four to five times but at the moment it is at historic highs.”
The ASIC Chairman said the Reserve Bank of Australia's decision to cut rates to a historic low of two per cent in May was fuelling investor demand. Medcraft’s comments come just after the Reserve Bank of New Zealand announced that starting 1 October 2015, bank lending to home investors in Auckland will be restricted to mortgages with an LVR of less than 70 per cent.
Consumer sentiment improves among mortgage holders
The Westpac-Melbourne Institute Index of Consumer Sentiment rose by a solid 6.4 per cent, something that is also a positive sign for mortgage holders, according to a report from fxstreet.com
The positive climb is being attributed to an ambitious budget and subsequent impact of a rate cut as confidence from respondents who hold a mortgage increased by 4.8 per cent.
"Certainly what we saw last year was that big fall in confidence, and confidence not really recovering," Mr Evans told the ABC.
"So household spending was sort of stuck in that 2-2.5 per cent growth pace and, given that household spending is between 60 and 70 per cent of the overall economy, to get above trend growth in the economy - and trend can be identified at around three per cent - you need 3.5 per cent."
National Australia Bank Ltd. cut the discount it offers on mortgages to landlords amid a regulatory crackdown on lenders to cool the housing market, according to a Bloomberg article.
The country’s fastest-growing mortgage lender expects growth in its investor home loans to start cooling from the quarter ending September as the interest-rate changes take effect, said Gavin Slater, group executive for personal banking.
“Banks are all starting to respond now,” Slater said in an interview with Bloomberg. “We have certainly tightened up on discretions on investor housing as compared to owner-occupiers,” he added, referring to the discounts on rates and other concessions that lenders grant to customers.
National Australia’s move follows the banking regulator’s call to slow growth in mortgages to landlords that sent home prices soaring. The Australian Prudential Regulation Authority urged lenders in December to limit mortgage growth to investors to 10 per cent annually, while the central bank has warned that speculation may lead home prices to drop.
ASIC fears property bubble to burst
ASIC has expressed concerns over rising house prices causing a property bubble, just as the Reserve Bank of New Zealand announced new restrictions on lending to investors in Auckland, according to an article from Your Investment Property Mag.
In an interview with the Australian Financial Review, ASIC Chairman Greg Medcraft warned that rising house prices in Sydney and Melbourne were showing signs of a property bubble.
“History shows that people don't know when they are in a bubble until it's over,” Medcraft told the AFR. “I am quite worried about the Sydney and Melbourne property markets. In housing, the long-term average income to average price ratio is four to five times but at the moment it is at historic highs.”
The ASIC Chairman said the Reserve Bank of Australia's decision to cut rates to a historic low of two per cent in May was fuelling investor demand. Medcraft’s comments come just after the Reserve Bank of New Zealand announced that starting 1 October 2015, bank lending to home investors in Auckland will be restricted to mortgages with an LVR of less than 70 per cent.
Consumer sentiment improves among mortgage holders
The Westpac-Melbourne Institute Index of Consumer Sentiment rose by a solid 6.4 per cent, something that is also a positive sign for mortgage holders, according to a report from fxstreet.com
The positive climb is being attributed to an ambitious budget and subsequent impact of a rate cut as confidence from respondents who hold a mortgage increased by 4.8 per cent.
"Certainly what we saw last year was that big fall in confidence, and confidence not really recovering," Mr Evans told the ABC.
"So household spending was sort of stuck in that 2-2.5 per cent growth pace and, given that household spending is between 60 and 70 per cent of the overall economy, to get above trend growth in the economy - and trend can be identified at around three per cent - you need 3.5 per cent."
