CANBERRA: Australia’s big banks are further tightening lending to housing speculators as authorities continue to fret about risks to the country’s hot property market.
Westpac Banking Corp., the largest lender to housing investors, from Wednesday will limit loans to 80% of the value of homes being bought by prospective landlords, from 95% previously. At the same time, Australia & New Zealand Banking Group Ltd. is capping its loan-to-value ratio at 90%, down from 97% earlier.
It follows similar steps to lower lending ratios in recent weeks by Commonwealth Bank of Australia Ltd. and National Australia Bank Ltd., which with Westpac and ANZ dominate Australia’s mortgage market.
Home prices have continued to rise across most of Australia, particularly in Sydney where they have jumped about 40% since 2012. New lending has been dominated by investor mortgages, which the central bank has warned is distorting the market, and last year prompted the banking regulator to call for investor lending growth to be limited to 10%.
After opting to keep the benchmark cash rate at a record-low 2% on Tuesday, Reserve Bank of Australia Gov. Glenn Stevens said the bank was working with other regulators to assess and contain risks that could arise in the property market.
Some economists have said concerns about overheating the property market have stayed the central bank from another swift rate cut to further stimulate other parts of the economy as investment in the mining industry falls.
Wayne Byres, chairman of the Australian Prudential Regulation Authority, last month told a senate committee hearing in Canberra that the regulator would be watching carefully for the banks to revise policies to ensure they had ended lending practices that were “less than prudent.”
