They are attracted to houses because of the potential for capital gains, he says. However, houses usually require larger mortgages than units and, if APRA does impose lending limits, investor buying activity would likely drop, Peleg says.
He says that single-income owner-occupiers would be another group that would likely find it harder to buy property if the regulator was to impose a debt-to-income cap on lenders.
Andrew Wilson, consultant economist at Bluestone Home Loans, questions the need for regulatory intervention. He says mortgage arrears and defaults remain low and price growth is slowing as affordability barriers increase.
“The significant pent-up demand built up over the past few years has been largely released and satisfied – and lacks the capacity to refuel rapidly from either lower interest rates or higher migration,” he says.
However, Shane Oliver, chief economist at AMP Capital, says a tightening of lending controls to slow the record levels of housing finance is warranted. He says more than 20 per cent of new loans are going to borrowers with debt-to-income ratios above six times, up from 14 per cent two years ago.
He says housing credit is growing faster than when APRA last started restricting lending in 2014, when it targeted lending to investors.
Dr Oliver says regulatory moves to slow lending growth looks “likely from later this year” and, if that occurs, capital city price growth could slow to about 7 per cent during 2022.
Still, he says regulatory intervention is only a “cyclical measure” and that long-term measures are needed to improve housing affordability, such boosting housing supply and decentralising away from major cities.
The Reserve Bank of Australia has consistently said it is unlikely to increase official interest rates until 2024, at the earliest.
Article Source: www.brisbanetimes.com.au