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RBA satisfied with housing market moderation - ANZ

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Apr 15, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    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 and Western Australia than in the rest of the country.”

    Referring to the recent 2014-15 update from the Foreign Investment Review Board (FIRB), the Bank included commentary around the risks to the strong increase in Chinese buyer purchases of Australian housing (largely off-the-plan apartments in Sydney and Melbourne).”
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