Ratings agency Moody’s has commended the move of Australia’s big four banks after they tightened home lending standards in the hope of limiting housing market risks.
Just two weeks ago, Moody’s said the “imbalances” in the country’s housing market is due to the dramatically growing number of investors, especially in a hot market like Sydney.
It seemed that the big four heeded the warning from Moody’s that also came with the same sentiment by Australian Prudential Regulation Authority (APRA) chairman Wayne Byres.
"These initiatives are credit positive since they reduce the banks' exposure to a higher-risk loan segment," Moody's vice-president Ilya Serov was quoted as saying by ABC.net.au
"In the absence of mitigating actions, the increasing proportion of investment and interest-only loans would, in our view, lead to a weakening of the bank portfolios' quality."
Meanwhile, both ANZ analysts David Cannington and Felicity Emmett believe the big four’s moves to restraint investor lending are likely to “soften” the housing market.
"The changes to investor housing lending practices are likely to have a marginal softening impact on housing sales and price growth, and as such will give the Reserve Bank some breathing space to keep rates low to support a broadening of the non-mining recovery beyond housing," they wrote in a research note.
With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now