Boost in owner home loans

MORTGAGE holders switched $1.2 billion worth of finance from investor loans to owner-occupier in November, according to the Reserve Bank of Australia.

The RBA’s monthly financial aggregates, released yesterday, show housing credit growth continued to moderate in November, falling to 0.4 per cent from 0.5 per cent in October.

The RBA estimates that $61 billion of home loans have been switched to owner-occu- pier since July 2015, with investor lending increasingly constrained by the Australian Prudential Regulation Authority’s intervention.

APRA has told lenders to limit annual growth in new investor lending to 10 per cent and then this year to limit higher risk interest-only loans to 30 per cent of new residential mortgages.

JP Morgan economist Tom Kennedy said APRA’s measures to reduce risk in the housing sector were working.

Total private sector credit rose 0.5 per cent in November with personal credit shrinking 0.2 per cent, but business credit grew by a better than expected 0.7 per cent.

CBA chief economist Craig James said the figures suggested the RBA had reason to be comfortable about the health of the financial system.

“Businesses seem to be finally embracing the low interest rates on offer at a time when housing lending is softening,” Mr James said.