While the Reserve Bank is doing its best to stimulate activity with record low interest rates, the big stick in the other hand is being directed at investor lending to cool off the property market in some postcodes. Fancy having the level of scrutiny placed on your loan application being dependant on the suburb you are looking to buy in and not on your ability to repay! For this reason we will see a lot of brokers spruiking the benefits of alternative lending products to lure investors away from the big banks who are being limited by these regulations.
The RBA deputy governor Philip Lowe says recent measures from banking regulator APRA were having a "positive, albeit modest, effect". "you've seen a number of banks say they're requiring larger deposits for investor loans, offering smaller discounts on interest rates and they're requiring higher serviceability levels,". But he added that the use of macroprudential tools can only be pushed so far. "How far can you push the tighter regulation of the banking system without causing the same volume of loans to be made but just through a different financial intermediary," Dr Lowe said. "Finance is very flexible and people are very good at moving the money from the people who have it to the people who want it." He said Australia has not experienced rapid growth in non-bank loans yet, but any tougher regulations would make that far more likely.