Despite recent rate hikes from many banks, property investor borrowing accelerated by 0.8% over December – the fastest rate of growth since June 2015.
This pushes the annual growth figure for investment housing credit up to 6.2% from 5.6%, according to the latest figures from the Reserve Bank of Australia (RBA).
These figures could concern the Australian Prudential Regulation Authority (APRA), which has been trying to slow down this type of lending since late 2014.
APRA actually has a 10% annual speed limit for property investment lending growth, so the big rise from 5.6% to 6.2% will concern them.
ANZ Bank economists Daniel Gradwell and Jo Masters agreed, and said APRA would be “on notice” if the growth continued
“Annual growth in investor borrowing remains well below APRA’s 10 per cent speed-bump, but ongoing monthly growth of this magnitude would put the regulator on alert once more,” they said.
AMP Capital Chief Economist Shane Oliver suggested that APRA should tighten investment lending even further.
“You could argue 10 per cent is still a relatively high number in an economy where household income growth is only really 5 or 6 per cent at best,” he told Fairfax.
Aust Dec credit grth > exp +0.7%/5.6%yoy driven by biz lending. Lending to prop investors +9%pace last 3 mths. Case for new APRA tightening pic.twitter.com/LK121LiVZq
— Shane Oliver (@ShaneOliverAMP) January 31, 2017
It is likely the bosses of the ‘big four’ banks will face questioning over this rise during the next round of parliamentary hearings in March.
The House of Representatives Committee on Economics is carrying out these hearings as part of their review of Australia’s banking and financial system.
Investment variable rate rises over past 2 months
The accelerating growth of property investment lending over December took place in spite of the recent rate hikes to both fixed and variable investment home loans.
Since the December 1 2016, these are the investment variable home loans on CANSTAR’s database that have experienced rate hikes.
Company
Product
Old Rate (1/12/2016)
New Rate (31/01/2017)
Change
Comparison Rate*
Adelaide Bank
Investment Smartfit Variable 90%
4.44%
4.54%
0.10
4.75%*
Adelaide Bank
Investment SmartSaver 90%
4.39%
4.49%
0.10
4.53%*
AMO Group
Inv Basic Variable
3.95%
4.05%
0.10
4.25%*
AMO Group
Investment Variable
3.95%
4.05%
0.10
4.25%*
AMP Bank
Select Package Investment Classic Variable 250-749k
3.99%
4.14%
0.15
4.16%*
AMP Bank
Investment Classic Variable
5.72%
5.87%
0.15
6.04%*
AMP Bank
Investment Basic Variable Loan
4.06%
4.21%
0.15
4.25%*
AMP Bank
Affinity Package Investment Classic Variable 250-749k
3.99%
4.14%
0.15
4.16%*
AMP Bank
Investment Essential Home Loan
4.37%
4.52%
0.15
4.54%*
AMP Bank
Professional Package Investment Classic Variable 250-749k
3.99%
4.14%
0.15
4.48%*
ANZ
Investment Variable
5.52%
5.60%
0.08
5.71%*
Arab Bank Australia
Inv The Basics
5.09%
5.24%
0.15
5.37%*
Aussie
Inv Select Standard Variable 100-499k 80%
4.09%
4.24%
0.15
4.43%*
Aussie
Inv Select Basic Variable 100-499k 80%
4.09%
4.24%
0.15
4.25%*
Auswide Bank
Freedom Package Investment Standard Variable 150k+
3.98%
3.99%
0.01
4.38%*
Auswide Bank
Investment Standard Variable
5.65%
5.72%
0.07
5.87%*
Bank Australia
Inv Bridging
4.84%
4.92%
0.08
4.96%*
Bank Australia
Inv Premium
4.84%
4.92%
0.08
4.96%*
Bank Australia
Basic Home Loan – Inv (LVR <80)
4.54%
4.62%
0.08
4.66%*
Bank Australia
Premium Package Inv Premium 100-399k
4.64%
4.72%
0.08
5.09%*
Bank of Melbourne
Advantage Package Investment Variable IO 250-499k
4.76%
4.84%
0.08
5.26%*
Bank of Melbourne
Investment Variable IO
5.51%
5.59%
0.08
5.76%*
BankSA
Investment Variable IO
5.58%
5.66%
0.08
5.82%*
BankSA
Advantage Package Investment Variable IO 250-499k
4.78%
4.86%
0.08
5.28%*
Bankwest
Premium Select Home Loan Investment 80%
4.29%
4.64%
0.35
4.66%*
Bankwest
Complete Home Loan Variable Investment 80% 200k+
4.19%
4.54%
0.35
4.93%*
Bankwest
Variable Investment 80%
5.67%
5.82%
0.15
5.84%*
Bendigo Bank
Residential Investment Variable 250-499k
4.86%
4.96%
0.10
5.08%*
Bendigo Bank
Connect Package Variable Investment 250-499k
4.51%
4.61%
0.10
4.84%*
Commonwealth Bank
Inv No Fee Variable Rate
4.79%
4.86%
0.07
4.86%*
Commonwealth Bank
Inv Standard Variable
5.49%
5.56%
0.07
5.71%*
Commonwealth Bank
Wealth Package Inv Standard Variable 350-749k
4.89%
4.96%
0.07
5.36%*
Commonwealth Bank
Inv Rate Saver
5.03%
5.10%
0.07
5.25%*
Commonwealth Bank
Inv Economiser
5.03%
5.10%
0.07
5.25%*
Delphi Bank
Investment Complete
5.55%
5.65%
0.10
5.78%*
Delphi Bank
Investment Essential
5.55%
5.65%
0.10
5.82%*
Gateway Credit Union
Inv Construction Loan
5.26%
5.38%
0.12
5.44%*
Gateway Credit Union
Inv Low Rate Essentials
4.62%
4.74%
0.12
4.76%*
Heritage Bank
Home Advantage Investment Variable 250-699k
4.29%
4.44%
0.15
4.79%*
Heritage Bank
Investment Variable
5.29%
5.44%
0.15
5.59%*
Heritage Bank
Investment Discount Variable 150k+
4.09%
4.24%
0.15
4.29%*
Homeloans
Investment Monipower
4.14%
4.24%
0.10
4.29%*
Homeloans
Inv Ultra Plus Variable IO 80 200-499k
4.14%
4.24%
0.10
4.42%*
Homeloans
Inv Ultra Plus Variable PI 80 200-499k
3.94%
4.04%
0.10
4.22%*
HSBC
Investment Home Smart
5.50%
5.60%
0.10
5.66%*
HSBC
Investment Variable
5.50%
5.60%
0.10
5.66%*
IMB
Investment Standard Variable 90
5.31%
5.41%
0.10
5.47%*
IMB
Platinum Package Investment Standard Variable 90 150k+
4.66%
4.76%
0.10
4.82%*
iMortgage
Investment Fusion Variable PI 80 200-499k
3.79%
3.89%
0.10
4.04%*
iMortgage
Investment Fusion Variable IO 80 200-499k
3.99%
4.09%
0.10
4.24%*
ING DIRECT
Inv Mortgage Simplifier 150-499k 80%
4.14%
4.29%
0.15
4.33%*
ING DIRECT
Inv Orange Advantage Variable 150-499k 80%
3.99%
4.14%
0.15
4.36%*
ME
Inv Flexible Home Loan Max 80 LVR
5.44%
5.54%
0.10
5.57%*
ME
Inv Basic Home Loan Max 80 LVR
4.14%
4.24%
0.10
4.27%*
ME
Member Package Inv Flexible Home Loan Max 80 LVR 150-399k
4.14%
4.29%
0.15
4.70%*
Mortgage House
Inv Advantage Complete Variable
4.44%
4.54%
0.10
4.70%*
Mortgage House
Inv Advantage Variable 100-749k
4.75%
4.85%
0.10
5.03%*
MyState
Special Residential Investment Loan 80%
4.16%
4.26%
0.10
4.31%*
MyState
Inv Standard Variable
5.11%
5.23%
0.12
5.30%*
NAB
Inv Base Variable Rate – P&I
4.25%
4.40%
0.15
4.45%*
NAB
Inv Base Variable Rate – IO
4.78%
4.93%
0.15
4.98%*
NAB
Private Tailored Pkg Investment Tailored Variable – P&I 250-499k
4.55%
4.70%
0.15
5.40%*
NAB
Choice Package Investment Tailored Variable – P&I 250-499k
4.55%
4.70%
0.15
5.08%*
NAB
Choice Package Investment Tailored Variable – IO 250-749k
4.65%
4.80%
0.15
5.18%*
NAB
Investment Tailored Variable – IO
5.50%
5.65%
0.15
5.79%*
NAB
Inv Base Variable Indicator Rate
5.19%
5.34%
0.15
5.39%*
NAB
Investment Tailored Variable – P&I
5.40%
5.55%
0.15
5.69%*
People’s Choice Credit Union
Investment Standard Variable
5.52%
5.60%
0.08
5.67%*
People’s Choice Credit Union
Investment Basic Variable 80%
4.74%
4.82%
0.08
4.89%*
QBANK
Classic Investor Offer 80%
4.09%
4.29%
0.20
4.35%*
QBANK
Inv Classic Home Loan
4.54%
4.74%
0.20
4.80%*
QBANK
Classic Plus Inv Classic Home Loan 250k+
4.44%
4.64%
0.20
4.99%*
QBANK
Inv Standard Variable
5.04%
5.24%
0.20
5.30%*
RAMS
Inv Full Feature
5.45%
5.60%
0.15
5.66%*
RAMS
Inv Low Rate
4.55%
4.70%
0.15
4.76%*
SERVICE ONE Alliance Bank
Investment Standard Variable 250-499k
4.60%
4.70%
0.10
4.85%*
St.George Bank
Investment Variable IO
5.59%
5.67%
0.08
5.84%*
St.George Bank
Advantage Package Investment Variable IO 250-499k
4.79%
4.87%
0.08
5.29%*
Suncorp Bank
Investment Variable
5.72%
5.87%
0.15
6.03%*
Suncorp Bank
Home Package Plus Investment Variable 150k+
4.09%
4.32%
0.23
4.69%*
Suncorp Bank
Investment Back To Basics
3.98%
4.29%
0.31
4.34%*
The Rock
Investment Variable
5.61%
5.73%
0.12
5.86%*
UBank
Inv UHomeLoan Variable
4.36%
4.46%
0.10
4.39%*
UBank
Investor IO-Investor Extra IO Offer
4.14%
4.24%
0.10
4.24%*
UBank
Investor PI-Investor Extra PI Offer
3.79%
3.89%
0.10
3.89%*
Virgin Money
Reward Me – Investment Variable 80 75-499k
4.09%
4.19%
0.10
4.32%*
Westpac
Rocket Investment Loan IO
5.60%
5.68%
0.08
5.83%*
Westpac
Inv Flexi First Option IO
4.95%
5.03%
0.08
5.09%*
Westpac
Premier Advantage Rocket Investment Loan IO 250-499k
4.80%
4.88%
0.08
5.26%*
Source: CANSTAR. Based on Investment variables loans available for $350,000, 80% LVR, P&I Interest and Interest Only. *Comparison Rate based on $150,000 over 25 years.
Compare Investment Home Loans
The Investment Home Loan Market
Table: Investment Home Loan Market – Snapshot of the current market (23/01/2017 -30/01/2017)
Basic Variable
Standard Variable
Package Variable
Average
4.56%
4.72%
4.58%
Min
3.69%
3.69%
3.88%
Max
5.65%
6.08%
5.60%
Source: CANSTAR. The search results do not include all home loan providers, and may not include all features relevant to you. Loans based on loan amount of $300,000 and available for principal and interest repayments.
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The post Property Investors Not Deterred By Rising Interest Rates appeared first on CANSTAR.