As banks prepare their earnings updates and the Reserve Bank prepares to once again increase interest rates, more evidence of a slowdown in new mortgage lending to owner-occupiers has emerged.
Since the RBA started increasing interest rates, growth in loans to owner-occupiers has moderated from the 9 per cent annualised rate seen in April to 8.6 per cent in June. “The growth in investment housing lending is likely supported by rising rental yields, low vacancy rates and the expected return of overseas migration,” APRA said., but warned that investing in new technology to support its business growth and stronger competition would crimp margins. Chief executive Shemara Wikramanayake said the bank was also carefully monitoring the impact of rising interest rates against expected credit losses.
Westpac has been the biggest loser in the higher margin investor market, with its volumes shrinking by 1.7 per cent. Chief executive Peter King said at an investor update on Wednesday that issues delivering loans to business customers were causing the contraction.Advertisement
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