Lending to highly-geared home buyers rose in the December quarter as the property market also rebounded, sparking debate over whether riskier lending is starting to re-emerge.
Loans with high loan-to-value ratios increased in the December quarter, potentially due to first home buyers entering the market.Analysis by UBS economist George Tharenou found the share of new loans that were more than four times the borrower’s income rose from 57.7 per cent to 59.3 per cent, the highest level since the figures started in 2018. Mr Tharenou said loans with an LVR above 80 per cent also rose from 39.9 per cent to 42 per cent, the highest since 2008.
Also on Tuesday, figures from the Australian Bureau of Statistics showed average capital city house prices rose 3 per cent in the December quarter, with Sydney prices up 3 per cent and Melbourne prices rising 3.4 per cent.The trends come as the Reserve Bank of Australia is closely watching the mortgage market, amid concerns ultra-low interest rates and strong house price growth could lead to prices overheating.
APRA said the increase in higher LVR lending was probably a reflection of strong demand from first home buyers, while it said the lending at higher debt-to-income ratios was within its historical average.“Despite moderately increased new lending at higher loan-to-valuation ratios and debt-to-income ratios, available indicators do not suggest any material relaxation in housing lending standards, with these metrics remaining broadly in line with historical averages,” APRA said.
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