Banks continue to curb investor lending

As widely expected, Australia’s central bank decided today to leave the official cash rate unchanged at 2.0 per cent. In the statement following the policy decision, the Reserve Bank, as it has done over the past couple of months, reiterated “The Bank is working with other regulators to assess and contain risks that may arise from the housing market.”

Effective tomorrow, Westpac will require all new property investors to put down a deposit of at least 20 per cent, while ANZ will require a minimum 10 per cent deposit.

The moves by Westpac and ANZ follow NAB’s decision last month to cap maximum loan to value (LVR) ratios for property investors at 90 per cent. Early last month, ING Direct capped LVRs to the more exuberant NSW property investor at 80 per cent, leaving property investment loans to the rest of the country capped at 90 per cent. Commonwealth Bank subsidiary, BankWest was one of the first banks to move, capping Australia wide property investor LVRs at 80 percent in May.

The banking regulator’s statistics for May, published this time last week, showed ANZ, CBA, NAB and Westpac grew property investor loans by 10.6 per cent, 9.9 per cent, 14.1 per cent and 10 percent respectively year on year, some exceeding the 10 percent speed limit imposed by the regulator. The other “advanced” bank, Macquarie should have received a handful of demerit points companying its 86.8 per cent speeding ticket.

It is understood the banking regulator, APRA, wrote to banks (again) last week with a please explain on their investor mortgage book growth.

» Statement by Glenn Stevens, Governor: Monetary Policy Decision – Reserve Bank of Australia, 7th July 2015
» Westpac caps LVRs on investor mortgages at 80pc – The Sydney Morning Herald, 7th July 2015.
» House prices: bank lending practices face more APRA scrutiny – The Australian, 2nd July 2015.
» Property investor loans keep growing above APRA’s 10pc limit – The ABC, 30th June 2015
» Four Banks and an out of control mortgage market – Australia: Boom to Bust Blog, 2nd July 2015.


  1. Sadly, that’s probably no obstacle to the people using the Sydney property market to launder their money.

  2. 2% is the new normal. It’s expected and people have short memories.

    The only way is up…baby

  3. This shows how useless RBA intervention is. The RBA keeps tweaking rates to no avail as the housing market keeps going gangbusters. If the banks had been forced to observe proper LVR ratios long ago, we wouldnt have these prices as high as we do today. Too little , too late.ITs just a question of how big this crash is going to be.

  4. This is interesting, and what I think is the right move for Westpac. Let the investors wear some of that risk instead of piling it all onto the banks. A lot of investors might actually have to stop and think about what they’re doing now that its going to be some of their own money on the line and not just something they signed a form to get. For many its going to shut them out completely.

    Now just wait for some articles where the RE industry people complain that the banks are pricing themselves out of the market and how its totally unfair.

  5. Its OK to try to curb investor demand in places where there is an obvious bubble, however in most of Australia and especially regional areas house prices are still going backwards.
    Does the 20% deposit also apply in (for example) Qld Wide Bay area where average prices are 20-25% below what they were in 2008?

  6. According to Lindsay David in one of his blog posts in June, it seems the banks would accept equity in an existing home for the deposit needed to purchase the next property. In the presentSydney or Melbourne situation, where prices are still rising and equity in earlier purchased homes are therefore also increasing, the new lending rules might not put too much of a curb on the mania.

  7. Gents I have a question here. How can I actually shorten the Australian Dollar? Would like to shift my money into USD. I have a Ozforex account where I shift money across a German account and Australia for a excellent forex rate. but right now I feel the USD is the way to park my hard earned money and to gain in the long run.

    What mechanism can I use to buy USD without having a account in the US?

  8. How about a US currency ETF that trades on the ASX.

    BetaShares US Dollar ETF (USD.axw) or ANZ Physical US Dollar ETF (ZUSD.axw)

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