Today APRA released data for the September Quarter on the ADIs exposure to residential property. As always it was a really interesting release (one of my favourites). Here is my take on the release: (VIEW LINK)
I get the feeling it is more than just jawboning. As you say its not just about this cycle but also future cycles. My concern is the sort of returns available from residential property are still better than most other asset classes will these tools really change anything? Banks still need to lend and for investors would a higher cost be enough of a deterrent?
Key question remains will APRA introduce targeted macroprudential measures? There's some signs that investor activity is starting to slow, albeit following a very large upswing. Would be helpful to put them in place even it's for future cycles, not the current one. Would allow for far greater flexibility for the RBA should they be put in place.
If interest-only investor lending is deemed riskier than others then capital weightings should be increased to reflect this, in my opinion at least. One problem that continues to persist is the risk-weightings on business lending. They're higher for a reason but also act as a deterrent to SME's looking to invest in a highish-rate, low-growth environment. Hard to get the animal spirits to awaken given the circumstances.