Many banks and lenders have recently increased lending rates on all of their investment loans, with little warning. Most increases have already taken effect - on new and existing borrowings.

Is that fair? .... Definitely not. Why so, when the Reserve Bank consistently tells us that rates are stable, unemployment is high and conditions for an economic resurgence are modest?

Well, the banking regulator, APRA www.apra.gov.au has been writing to the banks over the last year to warn them to keep their lending standards high (to control loan volumes) during a period of low rates and high property growth. More lately, they have expressed that each bank's investment lending should not grow by more than 10% per annum.

However, lending to property investors of late has consistently been over the 10% growth ceiling.
 
The Reserve Bank of Australia said in its latest data that lending to property investors grew by 0.8% in May and 10.4% year-on-year. Moreover, the central bank said housing credit was up 7.2%, close to its fastest pace since 2010.
 
APRA was prompted to introduce tighter lending conditions which include cutting discounts on investment loans. This new move by APRA came after the country’s investment property lending and soaring property prices continued to grow above 10%. The league table looks like this:


CBA 9.9%
Westpac 10%
ANZ 10.6%
NAB 14.1%
Suncorp 11.6%
Macquarie Bank 86.8% (yes, closer to 100% than 10%)

All that is only mildly alarming. The federal treasurer (and he should know) recently said there was never a better time to have a go. He said that housing is still affordable if you have a steady job.