New lending to property investors reached its fastest decline on record over the three months to September, as landlords navigate rising taxes amid falling property prices and increasing interest rates.
The latest data, released by the nation’s largest bank, Commonwealth Bank, shows that the proportion of its customers facing mortgage repayment difficulties has reached a 12‑year high.
During his annual budget defense, Commonwealth Bank treasurer Jim Chalmers noted that the share of borrowers more than 90 days behind on repayments rose from 0.73 percent of total lending to 0.8 percent.
This marks a return to arrears levels not seen since 2014, according to earlier trading updates.
Nathan Zaia, senior equity analyst at Morningstar, said the rise in arrears rates was a national phenomenon across the banking sector and appeared unlikely to have reached a peak.
“We are seeing an unequivocal upward trend in arrears and borrowers falling behind on their home loans,” Zaia added.
Zaia noted that the recent uptick stemmed from a historically low baseline.
De Lange acknowledged, “Following the five rate hikes this year, the market remains under close observation.”
The latest Australian Bureau of Statistics data revealed that new investor loans fell by nearly one third in the September quarter, the steepest quarterly decline recorded since 2002.
This marked a drop nearly double the previous largest quarterly decrease, according to the ABS.
Mish Tan, head of finance statistics at the ABS, explained that the data suggests investor activity is affected by more than just rising borrowing costs, including potential tax changes and anticipated lower house prices.
The Albanese government in the May budget introduced changes to the capital gains tax for investors and prohibited negative gearing for new landlords purchasing an existing property.
With investor appetite for housing collapsing by more than 30 percent, new lending to owner‑occupiers declined by 5.3 percent, contributing to an overall quarterly loan drop of 15 percent.
Mish Tan, head of finance statistics at the ABS, explained that the data suggests investor activity is affected by more than just rising borrowing costs, including potential tax changes and anticipated lower house prices.
“We have experienced an unusually prolonged period of very low arrears, so a gradual drift upward is not surprising.”
De Lange noted, “Following the five rate hikes this year, the market remains under close observation.”
The latest Australian Bureau of Statistics data revealed that new investor loans fell by nearly one third in the September quarter, the steepest quarterly decline recorded since 2002.
This marked a drop nearly double the previous largest quarterly decrease, according to the ABS.
“Because of our reforms, first home buyers will have to compete less with established investors for limited existing housing stock, and we’re starting to see that in this data.”
The number of new loans to investors to build a home was down 12 percent in the quarter, the ABS figures showed.
The Coalition has promised to repeal the investor tax changes were it to win government.
Andrew Bragg, the shadow housing minister, said: “Labor’s higher housing taxes are discouraging investment when Australia desperately needs more homes”.
“It is time these taxes were repealed before they do any more damage,” Bragg said.
