Is Easing Lending Finance A Sign Of Things To Come?

Total Lending Finance eased back a little in the month of April, and sits below recent highs in trend terms. 

 Lending Finance

Commercial finance has come unstuck a little lately, while APRA’s tightened serviceability criteria have slowed lending to both property investors and owner-occupiers, at least temporarily.
 Lending Finance2


At the industry level, it seems that low interest rates have helped the respective economies of Melbourne and Sydney – with business borrowing rates now confirmed as being at their lowest ever level – but elsewhere not so much.
Commercial finance
Commercial lending to the mining sector has been obliterated, down by more than half in rolling annual terms in the last year alone.
Commercial finance by industry

Other industries are not faring too badly.

Property investor loans

APRA’s crackdown has continued to slow property investor lending across the board.

Investor loans by state

Meanwhile in the Northern Territory, the property investment outlook is grim.

NT investor loans

The wrap

A short and snappy post today.
APRA’s macroprudential measures and their impact appear to be following a very similar trajectory to what played out in Britain during and after its Mortgage Market Review (MMR).
The initial measures ran interference with the market and knocked back prices and activity for a period of time, before the market reasserted itself and experienced a second wind.
Only some time later has Britain’s housing market reached its apparent peak, and eventually it was changes to tax policy (and a confidence sapping referendum) which will be recognised as having brought the up-cycle to a close.
Australia could be treading a similar path.
On Monday, the Commonwealth Bank of Australia will announce that it has slashed mortgage rates on a number of its products, with mortgage rates increasingly set to be available below 4 per cent from a number of lenders.

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Pete Wargent is a Chartered Accountant, Chartered Secretary and has a Financial Planning Diploma. He’s achieved financial freedom at the age of 33 - as detailed in his book ‘Get a Financial Grip – A Simple Plan for Financial Freedom’. Pete now manages his investment portfolio, travels and works as a consultant in the finance industry from time to time. Visit his blog

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