{"id":5710,"date":"2015-09-15T01:00:46","date_gmt":"2015-09-14T15:00:46","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=5710"},"modified":"2015-09-15T01:00:46","modified_gmt":"2015-09-14T15:00:46","slug":"is-apras-grip-on-the-banks-too-tight","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/is-apras-grip-on-the-banks-too-tight\/","title":{"rendered":"Is APRA\u2019s grip on the banks too tight? – Andrew Mirams"},"content":{"rendered":"

 
\nOur finance expert, Andrew Mirams<\/a>\u00a0<\/strong>from Intuitive Finance, has been looking into the impact of the new APRA rules on investors and in today’s show we ask Andrew if APRA\u2019s grip on the banks is too tight.
\n <\/p>\n

Transcript:<\/h4>\n

Kevin<\/b>:\u00a0 There is a lot of talk at present about what APRA is currently doing \u2013 the prudential authority \u2013 in terms of putting the screws on the banks and maybe restricting lending to investors. Let\u2019s find out if those APRA restrictions are having any impact and, if so, what impact are they having?
\nAndrew Mirams from Intuitive Finance has been looking at this. Hi, Andrew.
\nAndrew:<\/b>\u00a0 Good day, Kevin. How are you?
\nKevin:<\/b>\u00a0 Well, thank you. Andrew, tell us firstly, what is APRA doing? Can we have a look at what, if any, the impact is?
\nAndrew<\/b>:\u00a0 Firstly, APRA is the Australian Prudential Regulatory Authority, and they are charged with looking across the banking sector, making sure the banks are lending in a good manner, they have enough capital to meet all their requirements, etc. Over the course of the last year or so, they\u2019ve had some concerns about the amount of investment lending that has been growing.
\nYou and I both know that the share market has its ups and downs, and if there are not as many opportunities for superannuation and people to put that in, they\u2019ll gravitate back to property which is an Australian favorite. It just appears that with low interest rates and the markets moving quite well in Melbourne and Sydney that APRA is a bit concerned that the weightings of investors and owner-occupiers have got a bit out of hand.
\nThey have just recently started to put a few little measures in place to try and cool the markets and maybe restrict some of the lending practices from some of their lenders to investors.
\nKevin<\/b>:\u00a0 What are you seeing? Is it having an impact at all?
\nAndrew<\/b>:\u00a0 Well, it is and it isn\u2019t. The first thing that the banks did and the best way to raise capital is to raise your interest rates, so the first thing that everyone noticed was that people, all of a sudden, were paying a little bit more. To an owner-occupier, that\u2019s a concern.
\nWe\u2019ve done a previous interview about this. Would higher interest rates to investors actually have an impact? My opinion then, as it still is now, is investors will invest on the back of what their end goal is and the wealth creation that property gives them. The fact that they have to pay 0.2%, 0.3%, or maybe 0.4% more than what their home might be at the moment isn\u2019t really a great prohibiter. They\u2019re still in an all-time record low interest rate environment.
\nIt\u2019s not going to stop them because that\u2019s still tax deductible. If anything, it\u2019s giving them a greater tax deduction to still hold that property. Good markets still have their wealth creation happening.
\nThe other thing we are seeing is that some of the lenders that were really specifically involved in investment lending, some of the tweaks they\u2019ve made with their servicing capacities and their ability to lend to investors have really been wound back.
\nI would argue there is probably a little bit of unintended consequence here because some of your niche players and your strong investment lenders have had to really pull back. They\u2019re reporting their numbers are down by up to 40% on inflows, on applications, so it\u2019s had an impact here. If investors are still in the market, what it\u2019s actually done is it means that now the major banks are actually benefiting from that.
\nI\u2019m not sure they\u2019ve quite got the tweaks right, and I\u2019ve said this to you previously. I do agree with a lot of the measures they\u2019ve implemented, but maybe not all of them.
\nKevin<\/b>:\u00a0 The one thing we do want is a healthy banking situation in Australia. We don\u2019t want to see a repeat of what happened in America. We\u2019re certainly not headed down that path, I wouldn\u2019t have thought.
\nAndrew<\/b>:\u00a0 No. Our banks are rated in the top ten in the world, our Big Four. What Australia has done is, through the lessons of the recession we had to have in the 1980s and 1990s and the ups and downs, Australians are pretty good learners. I think our regulators in the past have done a pretty good job at implementing legislation and responsible lending practices and making sure clients can afford them. Our banks are pretty good at that.
\nAt the end of the day, the banks make money by lending money and holding it on deposit, so they want to continue to go with those practices, but there has to be a balance to all of that. That\u2019s where we\u2019ve recently seen the banks coming out with some capital raisings and things like that to make sure they\u2019re holding enough capital, that if anything was to go wrong, they\u2019re well protected.
\nKevin:<\/b>\u00a0 Always good talking to you. Andrew Mirams from Intuitive Finance. Andrew, thank you so much for your time.
\nAndrew:<\/b>\u00a0 A pleasure, Kevin. Thank you.<\/p>\n","protected":false},"excerpt":{"rendered":"

  Our finance expert, Andrew Mirams\u00a0from Intuitive Finance, has been looking into the impact of the new APRA rules on investors and in today’s show we ask Andrew if APRA\u2019s grip on the banks is too tight.   Transcript: Kevin:\u00a0 There is a lot of…<\/p>\n","protected":false},"author":176692471,"featured_media":5711,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,13,25],"tags":[101],"class_list":["post-5710","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-latest-story","category-sponsored-channels","tag-podcast"],"yoast_head":"\nIs APRA\u2019s grip on the banks too tight? - Andrew Mirams - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/is-apras-grip-on-the-banks-too-tight\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Is APRA\u2019s grip on the banks too tight? 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