RBA satisfied with housing market moderation – ANZ

By FXStreet David Cannington, Senior Economist at ANZ, notes that in its half yearly Financial Stability Review (FSR), the RBA indicated a sense of satisfaction with the moderation in house price growth and mortgage lending.

Key Quotes

“However, the Bank highlighted that they are monitoring housing market balance risks in some sub-markets.

While largely satisfied with the impact of macro prudential policy on dampening housing investor lending, the Bank hinted that there may be more tightening to come; “Given that some ADIs have continued to phase in the tightening required by the regulators, some further falls in the share of high-LVR lending and interest-only lending in the period ahead could be expected.”

In addition, the Bank highlighted that while last year’s lending changes have put recent home buyers in a better financial position to withstand a potential shock, low interest rates and solid employment growth have further bolstered the financial positions of existing mortgage holders; “mortgage buffers… (are now) equivalent to more than 2½ years of scheduled repayments at current interest rates.”

Nonetheless, the RBA is monitoring the impact of weaker economic conditions in some markets on mortgage delinquencies; “Public disclosures by the major banks indicate that arrears on housing loans are higher in Queensland …read more

Source:: FX Street