The rise in lending to property investors has got policy makers singing a new tune

The rise in lending to property investors has got policy makers singing a new tune. RBA Governor Glen Stevens recently made remarks regarding the housing market that have sparked debate about the possibility of macro prudential intervention. At the core of the issue is an increase in interest only loans to property investors by the banks. Record low interest rates are fueling investment in the housing sector which is now starting to cause concern for the RBA. However, with the broader economy struggling to deliver convincing growth in the wake of the mining investment peak the prospect of raising interest rates looks like an unpalatable option. Macro Prudential intervention raises the prospect of lenders being asked to reduce the amount they are lending to housing investors. This video from AFR provides a good overview of the situation and a few of the different consequences that need to be considered: (VIEW LINK)