Housing debt hits new high, passing $1 trillion

Adam Smith 2 June 2016

house coinsLoan levels have risen 7.4% over the last year.

According to a report by the Australian Financial Review, the value of outstanding home loans rose above the $1 trillion mark in April. While outstanding loans grew by only 0.5% in value for the month, the annual growth rate hit a five-year high of 7.4%, the AFR reported.

The result brings the value of outstanding home-owner debt to eight times its level 21 years ago. Home loan debt has nearly doubled over the last decade.

In spite of strong home loan growth, the paper reported growth to investors has slowed. Investor loans rose 0.3% in April, according to figures from the RBA. The increase is the smallest since May 2009.

Annual growth in investor housing loans has fallen from 10.9% a year ago to 6.5%, the paper noted, in the wake of warnings from the Australian Prudential Regulation Authority (APRA) for lenders to restrict investment lending to 10% or less.

Following APRA’s warnings, many lenders lifted their rates for investment loans. The RBA noted that this has seen a number of borrowers switch their loans from investment to owner-occupier loans.

“The net value of switching of loan purpose from investor to owner-occupier is estimated to have been $40 billion over the period of July 2015 to April 2016 of which $1.2 billion occurred in April,” the RBA said.

Westpac backflips on investor crackdown.

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