As evident by a huge decrease in the applications for loans in the month of March, the investors are withdrawing from the property market.
The observation is being backed by figures. The investor loan valuation has come down by 9% or close to $1 billion, the lending has decreased by 14%, the interest for owner-occupier has come down by 1.9% and the mortgages issued have seen a cut of 4.4%, over the course of a month. These results are a product of the stricter credit regulations, as demanded by the team of APRA and the outcome from the analysis of loose lending rules by mortgage agents.
Although the trend of a decrease in prices of houses has been there for a few months now, the rate has accelerated. Notably, the prices of houses in Sydney have gone down by 1.2 percent in the first quarter of the calendar year, while the value for Melbourne markets has seen a slashing of 0.7 percent.
Henry St. John, an expert from JP Morgan has stated that the situation is commencing to become bad for the housing finance sector. He announced that these advances in the fields of investor lending and lending with more loan against income value are developing on a rate that is much faster than what APRA would have targeted.
As the count of loans occupied by owners that are being financed again has come down every month for the months of Jan, Feb and Mar of 2018, Henry has also highlighted that the constraining of lending standards from the end of banks has brought the flow of people having mortgages who are making changes to lenders to a halt.
The contribution of investors in borrowing has seen a level as low as 34.1%, lowest in last five years. Also, the contribution of people who are buying homes for the first time has decreased in an unprecedented manner in a long period of time.
Beth Gordon is a financial reporter, focusing on technology and national security. Before joining Shouzy, Beth worked as a staff writer at Fast Company and spent two years as a foreign correspondent in London. Her work has been published on NPR, Business Insider, Medium and many other outlets.