Home buyers are being forced to stump up bigger deposits but regulators will be concerned that it is as yet having only a modest impact on the growth in housing credit.
The share of new housing loans with deposits over 20 per cent climbed to 79 per cent in the December quarter compared to just 77 per cent in the same period a year ago.
The new data from the Australian Prudential Regulation Authority was one indicator of a broader tightening of lending standards by banks under pressure from regulators. It has included higher loan to valuation ratios, bigger income buffers on repayment ratios and disallowing negative gearing tax deductions.
The measures appear to have resulted in some stabilisation in the rate homebuyers are taking on new debt. New home loans rose 6.4 per cent in the year to the end of January well down on the rate of 7.3 per cent a year ago.
The monthly growth rate at 0.5 percent in January has barely moved this year, according to the Reserve Bank of Australia.
But housing debt is still growing faster than household incomes, a situation which regulators fear is unsustainable. RBA governor Philip Lowe said last week some in his staff had urged him to cut rather further to stimulate the economy but he was worried doing so could inflate the housing market further.
Despite measures designed to crack down on investor lending, annual growth in investor lending is still 6.6 per cent compared to 6.3 per cent for lending to owner occupiers.
Michael Workman, an economist for CBA, said the latest credit figures showed total growth is down from last year but the fact that investor lending growth has remained high for four months will worry regulators.
"Firmer housing investor credit annual growth may interest the RBA and APRA given their concerns about financial stability," Mr Workman said.
Tom Kennedy, economist for J.P. Morgan Australia said while housing credit growth has now stabilised it is still quite close to the 10 per cent annual growth which regulators have said it is a red light.
He said however he expected credit growth would slow this year. "We expect ongoing pressure from the regulators and weaker housing turnover to push annual rates lower from here." If it did not regulators could force even more tightening on banks.
