Housing credit growth eases, stricter lending criteria force borrowers to smaller lenders.
The minutes of the last Reserve Bank meeting in Sydney on the 6th of November indicate little concern for the property market. Gross Domestic Product (GDP)is expected to be around 3.5% on average for 2018 and 2019. Domestic consumption has continued to grow by around 3% despite low growth in household income, one factor contributing is the increase in on-line purchasing.
Residential building approvals are down for the September quarter however there is a large pipeline of approved work still to be done. The Board noted the fall in Sydney and Melbourne established house prices however remain stable in most other cities. Rent inflation remained low across the country.
The banks have passed on modest increases to existing customers with variable rate loans. They also noted that any slack in lending by the larger banks is being taken up by Authorised Deposit Taking Institutions (ADI’s) that include smaller banks, credit unions and building societies.
“Members noted that the easing in housing credit growth was likely to reflect both tighter lending conditions and some weakening in demand. Stricter lending criteria had reduced maximum loan amounts. At the same time, however, interest rates offered on new loans remained lower than interest rates on outstanding loans, consistent with banks continuing to compete for new borrowers.”
This is another good reason to seek out a good mortgage broker who understands the policies of the various lending institutions and can provide informed advice to better ensure successful borrowing.
The Board decided to leave the cash rate unchanged at 1.5 per cent.
Minutes can be viewed