Credit Growth Drop Due to Housing Slump

A worrying prediction has been given for lending growth due to investors increasingly pulling out of the market contributing to the recent market downturn.

Westpac’s CEO Brian Hartzer stated that he “expected house prices to cool further, and investor demand to remain weak” which will contribute to further decline in credit growth by 4 per cent with credit growth to sit a predicted 3.5 per cent

Furthermore the annual results for Australia’s second biggest bank have revealed how the landmark Banking Royal Commission has impacted the world of mortgage lending. Interest only loans now only comprise 35 per cent of Westpac’s portfolio, compared to 40 per cent in the first half of 2018. [1]

Further uncertainty in the housing market and the, soon to be revealed, recommendations from the Royal Commission are certain to ensure that lending world is set for a big shake up in the years to come.

[1] AFR, November, 2018.