Treasurer Scott Morrison has urged financial regulators to crack down harder on loans to real estate investors amid revelations that foreign buyers are spending $8 billion per year on new homes in NSW and Victoria, locking out owner-occupiers.
The call came as the Treasurer and his state counterparts met on Friday to find solutions to problems of housing affordability exacerbated by a return to the market of investors after earlier attempts to contain them had "worn off".
"I have been concerned, over the last couple of months, that the measures that were put in place a few years [ago] have worn off and it is now for the council of financial regulators to determine what the next step is," Mr Morrison said on Friday.
Mr Morrison referred to "a sharp increase in the level of investor credit, particularly over the last couple of months".
He said it was was no longer just a question of housing affordability, but "frankly, also an issue about household debt...and the need to make sure that is well-managed from a financial stability point of view".
His comments highlight the federal government's increasing concern about housing affordability and its determination to make it a focus of the May budget.
Within minutes of the Treasurer's press conference the Commonwealth Bank raised its standard variable rate for investors by a quarter of a per cent to 5.8, while raising its rate for owner-occupiers just 0.03 per cent. Bendigo Bank also moved within an hour of the meeting, lifting its investment interest rate by 0.25 per cent while leaving its rate for owner-occupiers unchanged. Westpac and ANZ moved during the meeting to lift theirs rate on interest-only loans saying the changes reflected higher lending costs and a "range of regulatory and risk factors".
Analysis of Australian Bureau of Statistics data by Fairfax Media shows the share of loans taken out by investors had climbed above 50 per cent for the first time since the Prudential Regulation Authority took action to slow down bank lending to would-be landlords and negative gearers in 2015.
Of the $13.8 billion lent to investors in January, only $1.2 billion was for building new homes.
A separate analysis released by Credit Suisse on Friday finds that foreign buyers are spending $8 billion a year on new houses in NSW and Victoria, buying one in five new homes across the two states.
Pre-empting an official move against lending to investors and negative gearers, ANZ group executive Fred Ohlsson said the bank had pushed up its rate for investors in order to "closely manage" regulatory obligations and its own exposure to risk in a competitive environment.
"We believe this is a balanced decision that reflects the range of regulatory and risk factors, and the pressures on family budgets," he said.
Bendigo and Adelaide Bank Managing Director Mike Hirst said the move would help "meet regulators expectations in dampening demand for investor lending."
Housing affordability was a key subject of discussion in the treasurers' meeting in Canberra.
Mr Morrison said the proposed 'bond aggregator' model had been taken to "the next level" with agreement from the states.
Mr Morrison said the next meeting of treasurers would look at supporting housing associations "so they can play an even greater role in ensuring enough affordable housing is out there in the market."
Mr Morrison would not comment on state requests for Commonwealth land to be released for housing, and appeared to rule out a Greens proposal to help the states replace stamp duty with a land tax, saying that changes to stamp duty were a matter for them.
"The government will iron out its package with the budget," he said.
With Myriam Robin and Georgia Wilkins