New rules crack down on high risk loans as Australian property market heats up
A crackdown on risky lending will limit banks’ capacity to extend highly geared mortgages, as the financial regulator launches a pre-emptive strike against the growing excesses of an overheated property market.The Australian Prudential Regulation Authority announced a 20% cap on the share of new lending that banks can do at a debt-to-income ratio above six – a mortgage worth more than six times the borrower’s income.While Jim Chalmers said the move would “help with financial resilience and housing affordability”, the Greens immediately criticised it as insufficient and experts said it would not curb the current rapid rise in lending growth and property prices.Sign up: AU Breaking News emailThe newly announced restriction lands amid a worsening housing crisis, with a recent report highlighting affordability is now at its worst on record and that a typical household needs to dedicate nearly half of its pre-tax pay to service the average new mortgage.An explosion in lending to landlords has been of particular concern to regulators.
Property investors account for two in five new loans, and the value of investor lending surged by 18% in the September quarter alone.The lending restriction will start in February, and Apra’s chair, John Lonsdale, said the regulator was prepared to intervene further.“We will consider additional limits, including investor-specific limits, if we see macro-financial risks significantly rising or a deterioration in lending standards,” he said.It has been a decade since the regulator last intervened to put speed limits on runaway lending, which dragged down home prices.Analysts said the new cap on new high risk lending would not have the same effect.
“This is a guardrail for stability, not a handbrake on demand,” said Nicola Powell, Domain’s chief of research and economics.“It won’t cool prices or improve affordability – nor is it meant to.It reins in the riskiest edge of lending.”Apra data shows only 10% of new loans to investors are made at debt-to-income ratios of six or more, and about 4% of new owner-occupier loans – well short of the 20% cap.Jon Mott, a bank analyst at Barrenjoey, said “while it is positive to see Apra is focused on the potential build-up of risk in the housing system given very over-leveraged Australian households, this policy is unlikely to be a binding constraint in the short to medium term”.
Sign up to Breaking News AustraliaGet the most important news as it breaksafter newsletter promotionChalmers said the new restrictions were “prudent steps to maintain responsible lending”.“These rule changes are an important way for the regulator to reduce risk in our economy, but these efforts will also help when it comes to getting people into homes.”Eliza Owen, the head of research at property data firm Cotality, said limiting high risk lending was “a good move in an environment where investor concentration in the market was unusually high and back to levels seen in the 2010s”.“It’s more likely to have an impact on highly leveraged investors than owner occupiers.It’s more like a preventative measure to stop a blow-out in high debt-to-income lending,” Owen said.
“At the end of the day, the regulator can only do so much for housing affordability,That’s more for fiscal policy change, like [reforming] the capital gains tax concession,”Greens senator Barbara Pocock said the move, while a welcome start, did not go far enough and that “first home buyers are being priced out by investors at weekend auctions”,“Apra must use all the tools in their toolbox to rein in investor lending that is exacerbating the housing affordability crisis,” Pocock said,
Labour is still in a muddle on North Sea oil and gas | Nils Pratley
Labour’s manifesto commitment on North Sea oil and gas production was a fudge. On one hand, it said no new licences “to explore new fields” would be granted. On the other, it said existing fields would be managed “for the entirety of their lifespan” in a way “that does not jeopardise jobs”.The formulation raised many questions. Where, exactly, would the line be drawn between a new field and an existing field? What would be the approach to protecting workers when, as now, North Sea jobs are estimated to be going at a rate of 1,000 a month according to analysis by Robert Gordon University?The thinking is only slightly easier to understand now
Ed Miliband confirms crackdown on North Sea exploration – but new drilling will continue
The government has ruled out new North Sea oil and gas exploration or lower taxes for fossil fuel companies as it struggles to protect workers from the industry’s collapse.In a strategy paper, Ed Miliband confirmed the crackdown on new North Sea exploration – although the energy secretary will still allow new offshore fossil fuel projects to move ahead as long as they are linked to existing fields.The strategy was released alongside Rachel Reeves’ budget statement, which ended months of speculation over the future of the North Sea industry by confirming the government’s intention to ban new oil and gas licences to explore new fields, and keep tax rates in place.The Labour party swept to power with a promise to end new exploration drilling, alongside a pledge to work with oil and gas companies to manage the North Sea’s remaining lifespan.The government hopes that by allowing “tie-back” projects that are linked to existing schemes it can strike a balance between protecting thousands of North Sea jobs and meeting the UK’s climate commitments
North Sea plan allows drilling while enabling Labour to keep ‘no new licences’ pledge
The energy secretary, Ed Miliband, has returned from the Cop30 climate conference in Brazil, where he championed the UK’s world-leading promise to ban all new oil and gas licences and backed the call for a blueprint to “transition away from fossil fuels”.Back at home, the government says it is sticking to its manifesto pledge by becoming the first major economy to have a 1.5C- and climate science-aligned no new licences position, but it plans to allow some new drilling in oil and gas fields that have existing licenses.The North Sea strategy, released on Wednesday alongside the autumn budget, will introduce “transitional energy certificates” that will allow new drilling on or near existing fields. These are called “tiebacks” and will enable a small amount of new fossil fuel extraction
Computer maker HP to cut up to 6,000 jobs by 2028 as it turns to AI
Up to 6,000 jobs are to go at HP worldwide in the next three years as the US computer and printer maker increasingly adopts AI to speed up product development.Announcing a lower-than-expected profit outlook for the coming year, HP said it would cut between 4,000 and 6,000 jobs by the end of October 2028. It has about 56,000 employees.“As we look ahead, we see a significant opportunity to embed AI into HP to accelerate product innovation, improve customer satisfaction and boost productivity,” said the California company’s chief executive, Enrique Lores.He said teams working on product development, internal operations and customer support would be affected by the job cuts
Ministers approve £750m Marlow Film Studios development after review
Ministers have approved a development to build a £750m Hollywood-style film and TV studios in Marlow, west of London, a project that has faced local opposition and been seen as a test of Labour’s appetite to prioritise economic growth.The Marlow Film Studios project has received high-profile backing from film-makers including the director of 1917, Sam Mendes, the director of Titanic and Avatar, James Cameron, and the Captain Phillips director, Paul Greengrass.Last year, Buckinghamshire county council rejected the planning application, prompting its backers to lodge an appeal to the national planning body to get the decision overturned.However, Angela Rayner, the former secretary of state for housing, communities and local government, called in the planning application. The outcome of the review had been seen as a benchmark for Labour’s desire to put economic growth ahead of local opposition, as stated repeatedly by the chancellor, Rachel Reeves
The latest inflation figures offer no joy – except to the gas producers whose windfall profits remain largely untouched | Greg Jericho
The latest inflation figures showed a jump in the growth of average prices from 3.6% to 3.8%. But they also indicate just how much our economy is caught up in the ramifications of Russia’s illegal invasion of Ukraine, which sent gas prices higher – and with it our electricity prices.The October consumer price index figures were a turning point for data in Australia
Reeves: working people will pay ‘a bit more’ through income tax threshold freeze; OBR chief ‘mortified’ by leak – business live
New rules crack down on high risk loans as Australian property market heats up
Foreign interference or opportunistic grifting: why are so many pro-Trump X accounts based in Asia?
London councils enact emergency plans after three hit by cyber-attack
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