“Investor loan values hit a new high this month, but the pace has slowed significantly, which could be a sign that some of the heat is coming out of the market,” she said.
Macquarie analysts said in a note that overall home credit rose 8.7% on an annualized basis in the three months to Dec. 31.
“On a three-month annualized view, Commonwealth Bank of Australia and National Australia Bank are growing at 1.3 times and 1.6 times the system respectively, while ANZ is showing no growth,” Macquarie said.
Outside the majors, Bank of Queensland saw 1.2x system growth on the back of stronger volume growth at ME Bank over the past month, Macquarie said.
RateCity said banks have raised their fixed rates by 1% or more over the past year. He said banks were likely to adopt standard floating rates even though the Reserve Bank of Australia, which left rates steady on Tuesday, is keeping the cash rate at 0.1% for the rest of 2022.
“Even if the RBA holds out until 2023, there’s a good chance that lenders will still increase variable rates, especially if funding costs continue to rise,” Ms Tindall said.
“A series of cash rate hikes, whenever they occur, are likely to put a damper on our real estate market. Anyone who borrows at full capacity will see their budget shrink, which could be enough to cool things down, particularly in real estate hotspots such as Sydney and Melbourne.
Ms Tindall also warned that more than a million homeowners have never experienced a rate hike.
“It’s amazing to think that there are well over 1.1 million households that have never experienced an interest rate hike,” Ms Tindall said.
“Australia hasn’t seen an RBA rate increase in over 11 years, which means there’s a generation of mortgage holders who could be in shock when their monthly repayments automatically start to rise” , she said.
Analysts have warned that growth in the home loan market will begin to slow this year as credit conditions tighten.
“While most people will be able to accept future rate hikes on the chin, albeit with gritted teeth, some people who have been hit hard financially by COVID or haven’t seen a decent pay rise in a while may struggle to balance the budget,” Ms Tindall said.
“The data shows the mortgage market is in full swing, however, future rate hikes could shake things up.”