2012 and 2017, particularly in the cities of Sydney and Melbourne. At the time, regulators imposed several restrictions with the aim of cooling down the housing market, including a 10 per cent cap on annual investor lending growth, and a 30 per cent cap on interest-only mortgages as a proportion of total new housing lending.
However, many analysts expect different measures to be adopted this time, since the current housing price boom is being driven by owner-occupiers instead of residential property investors.
“A positive feature of this housing cycle compared to that of the last is a higher proportion of first home buyers and owner-occupiers entering the market,” Frydenberg noted. “With Australia’s economy well positioned to strongly recover as restrictions ease, it is important to continually assess the appropriateness of our macroprudential settings.”
Experts are of the view that through these measures would include the imposition of a limit on how much can be lent as a share of a borrower’s income. Currently, the proportion of loans taken above six times an applicant’s household income account for about 22 per cent of new mortgages, up from just 16 per cent a year ago.
