Regulators urged to put the brakes on investment lending

Adam Smith 13 February 2017

danger aheadFinancial system inquiry head David Murray has called on regulators to further curb investor lending.

Murray has argued the 10% cap on investor loan growth put in place by APRA is not enough to put the brakes on investor lending, the Australian has reported. Murray claimed the pace of investor lending was causing instability in the housing market.

“It’s concerning that house prices should be so high and household indebtedness should be so high. It presents a future risk to the economy, so I’d be in favour of more being done,” Murray told the Australian.

The Australian reported that APRA has expressed concern to banks about investor lending, which currently makes up 40% of the home loan market. The paper claimed APRA's warning may have led to recent hikes on investor loan rates. Murray told the Australian more needs to be done to stave off potential market shocks.

“If there are more investors in the market and the market ­softens, you’re more likely to have forced sales in the market. There’s less stability in this kind of market,” he said.

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