ANZ analysts note that Australia’s housing credit growth has remained subdued in this easing cycle (compared to other recent cycles) despite the dramatic turn in house prices since mid-2019 and the lift in new housing finance commitments.
“Lacklustre investor housing credit growth is the primary drag. APRA’s 2017 changes to interest-only loans is, we think, a significant contributing cause for the weak investor housing credit growth. That change considerably reduced the number of interest-only loans (as a share of all loans), which has led to a portion of housing debt that is being paid off faster than was previously the case.”
“The altered composition of housing credit means that, compared to two years ago, greater growth in new loans would be needed to achieve the same level of housing credit growth. We think this effect will continue to restrain housing credit from increasing sharply through the first half of this year, even though we expect the housing market to continue its recovery.”
“As the RBA’s focus is on the stock of debt, it is likely to remain relaxed about the policy implications of continued rapid price growth.”