Australia : The steady strangulation of investors in the property market has intensified with the outstanding value of interest-only loans falling by almost $100 billion over the past year.
Interest-only (IO) loans have now collapsed almost 60 per cent since APRA slammed the brakes on them in March 2017.
Owner-occupiers have remained resolute, with loans up 3.1 per cent over the year, although this is still a step down from the 3.9 per cent growth in the previous quarter.
“The outstanding stock of IO loans has now slumped $93 billion year-on-year [-16 per cent] with interest only-loans making up 31 per cent of all mortgages, down from 39 per cent a year ago,” UBS analysts wrote in a note to clients.
UBS economist George Tharenou said while the switch from IO to principal and interest (P&I) loans was a modest 0.1 per cent, or $1.6 billion, of nominal income across the economy, it hit individual borrowers harder.
“For individual households the [around] 35 per cent increase in repayments is significant,” Mr Tharenou said.
