Treasurer Scott Morrison has signalled that renewed surge in investor property buying – particularly with interest only loans – is likely to trigger a fresh regulatory crackdown on banks as part of the government’s efforts to boost affordability for actual home buyers.
With the May budget due to unveil a series of measures that would “reduce the burden” on those looking to buy or rent a house, Mr Morrison indicated that so-called macroprudential restraints on lenders introduced in 2015 were no longer working as effectively as they were in 2016.
“There remain pressures that have built up again over the last few months,” Mr Morrison said in Canberra on Monday.
Speaking after returning from the Group of 20 finance minister’s meetings in Germany on Friday and Saturday, Mr Morrison said it was up to regulators – which are led by the Reserve Bank of Australia and the Australian Prudential Regulation Authority – to be “using the levers that they have”.
“I had discussions with the Council of Financial Regulators and we’ve been looking at these issues on the investor side, on the demand side, quite significantly, and that is the appropriate place for that discussion to take place,” he said. The council is chaired by the RBA and includes APRA, ASIC and federal Treasury.
“They’ve done it before wisely and it’s for them to take any further action that they see as necessary.”
The remarks are the clearest indication that the federal government supports a renewed focus on bank lending to investors, which has gathered steam since the Reserve Bank last cut the official cash rate in August last year and is nearing APRA’s 10 per cent annual speed-limit.
Reserve Bank assistant governor Michele Bullock effectively warned banks last week that regulators are weighing up more restraints to curb demand in cities such as Sydney and Melbourne, where prices continue to surge at double-digit rates.
Two of the country’s big four banks – National Australia Bank and Westpac – have already responded to the regulatory jaw-boning, hiking their interest rates for both investors and owner-occupiers.
Mr Morrison contrasted the Coalition’s approach to the nation’s potential housing bubble to Labor’s plans, which include curbing negative gearing.
“The Labor Party only has a policy to increase taxes,” Mr Morrison said. “And they promise that by increasing taxes that everybody will be able to buy a house wherever they want.
“That is an absolute cruel hoax. I mean it’s not like they’re taking the money they’re saying from raising the taxes and investing it in affordable housing or social housing or anything like that.
“They’re just stuffing the bag full of cash from their tax increases and just carrying it off to spend on higher welfare payments. Now, that’s not a housing policy, that’s a tax and spend policy.”