Slowing investor borrowing will be welcomed by APRA

Housing finance took a breather in February which should please APRA and the RBA.

The latest stats show that the value of housing finance commitments fell a solid 2.2% m/m in February, led by the investor segment.

While owner-occupier finance rose slightly, the value of investor commitments posted the largest monthly drop since APRA’s macroprudential regulation took place in September 2015.

The ANZ Bank commented:

• The drop in investor activity is likely to provide some comfort to the RBA and APRA.  
• The RBA noted at their meeting last week that house “prices are rising briskly”, while concern over financial stability led to APRA implementing further regulation on housing lending at the end of March.
• While today’s data predate these recent regulatory changes, any slowdown in lending or price growth would be welcomed.
• While the total value of investor borrowing dropped in February, the value of construction finance continued to rise.
• Building approvals have been surprisingly resilient in recent months and finance approvals suggest this may persist over the near term.
• Nonetheless, we continue to believe we are around the peak of dwelling construction activity.