(21 May 2015 – Australia) The Australian Prudential Regulation Authority (APRA) has imposed new rules on banks to slow the growth of lending to investors.
The banking regulator has imposed a cap to slow the growth of credit offered to investors to less than 10 percent a year, in order to reduce the risk of bad debt.
It is expected the move could mean cheaper home loans for first home buyers, who are increasingly being priced out of the market.
In March, investors accounted for 40 percent of property sales.
The amount of home lending grew 3.8 percent to a record A$31.3 billion in March, helped by a A$12.9 billion surge in borrowing by investors.
APRA’s move could be good for banks also, giving them an opportunity to lower the risk of loans not being repaid.