The residential transformation of St Kilda Road is set to continue into with more new apartment plans for the sought-after boulevard.

Wing Tai Asia has lodged plans for a major residential tower at 464-466 St Kilda Road, replacing the former VACC House with an 18-storey mixed-use development designed around a retained heritage podium and a sculpted contemporary tower.

The proposal, prepared under Victoria’s Significant Residential Development with Affordable Housing pathway, would deliver 325 apartments and ground-floor retail across the prominent 4,653 sqm boulevard site in Melbourne’s St Kilda Road North Precinct.

The project centres on the adaptive reuse of the site’s heritage-listed VACC Building, an eight-storey office designed by Bernard Evans that has occupied the address for decades. Planning documents state the development would involve “carefully dismantling and conserving off-site the original metal fabric of the podium visible from St Kilda Road,” before reinstating it as the defining frontage of the new scheme.

Above the restored podium, Wing Tai is proposing a curvilinear residential tower. The scheme includes 172 one-bedroom apartments, 63 two-bedroom apartments, 66 three-bedroom apartments, and 24 four-bedroom apartments, alongside two ground-floor food and beverage tenancies fronting St Kilda Road.

The tower has been designed with substantial articulation and variable setbacks to minimise perceived bulk and maintain view corridors along the boulevard. Urbis, which prepared the planning report, said the design “has been significantly articulated through a curvilinear design” with “an interplay with materials, façade expression and depth” to create visual separation and visual interest.

The proposal also includes 254 basement car spaces, landscaped pedestrian links connecting St Kilda Road and Queens Lane, and a biophilic landscape strategy featuring canopy trees, raised planters, cascading greenery and a glass oculus pool overlooking the eastern frontage.

Planning documents confirm the $270.1 million development will contribute 3 per cent of project costs to the Social Housing Growth Fund as part of the application process.

Wing Tai acquired the St Kilda Road property in 2018 alongside Abacus Property Group for $95.38 million, before later consolidating ownership of the site. The property previously served as the Victorian Automobile Chamber of Commerce headquarters for around 60 years.

The transformation of the St Kilda Rd boulevard is already beginning to materialise, with a number of high-profile projects recently completed, launched, or approaching launch as developers continue to back the long-term appeal of the precinct.

Among the most notable recent completions is Louise by Samuel Property Group, just off the strip on Queens Lane, the same pocket Hirsch &amp; Faigen recently launched The Queensbury. Mirvac is too on the same street with The Albertine, which is approaching completion.

Dexus recently secured approval for its slice of St Kilda Road, while Gurner also has approved plans for the precinct.

Joel Robinson

Wing Tai unveils 325-apartment St Kilda Road tower on former VACC House site

Malaysian developer <a href="https://www.apartments.com.au/developers/s-p-setia">SP Setia</a> is the latest to jump into St Leonards booming Transport Oriented Development precinct.

The developer, which has previously delivered Sapphire by the Gardens apartment development in Melbourne, identified the Atchison Street site in 2023. It filed a Scoping Report around 12 months ago, and now has revealed the designs for the new&nbsp;40-storey mixed-use tower.

The State Significant Development Application covers <a href="https://next-portal.urban.com.au/projects/14650/summary">20-22 Atchison Street</a>, a 1,374 sqm site positioned between St Leonards Station and the new Crows Nest Metro station.

Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, the project would deliver 181 apartments, above a four-storey commercial podium, five basement levels, and new public domain works along Mitchell Street. The apartment mix comprises 35 one-bedroom apartments, 39 one-bedroom-plus-study apartments, 85 two-bedroom apartments, and 22 three-bedroom residences.

The proposal has been lodged as a shop-top housing development under the NSW Government’s TOD planning pathway, which allows increased density around key transport infrastructure. The site sits within the recently rezoned Crows Nest Accelerated TOD Precinct.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b799673d-48e2-46b0-801a-0e33a9330100" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20site.png?VersionId=dPh0UfwfaHpbFL1R7H1cbZNbIW0CHbCC" />

SP Setia acquired the Atchison Street site as part of its continued expansion into the Australian apartment market. In comments made to City &amp; Country (The Edge Malaysia) in 2023, SP Setia President and CEO Datuk Choong Kai Wai described the acquisition as “a strategic move” aligned with the group’s post-pandemic market recovery strategy.

“Our target for this exceptional development is local and overseas buyers, including first-home buyers, downsizers and investors,” Choong said.

The tower has been designed as a slender vertical form rising from a mixed-use podium, with COX Architecture positioning the development as a response to the evolving St Leonards and Crows Nest skyline.

“The purpose of the project is to facilitate the delivery of high-quality housing at a strategically located site and deliver a built tower outcome that is consistent with the desired future character of St Leonards and aligns with the TOD controls,” the design report stated.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b1a85eee-76f7-436c-a6da-73ba827b9b13" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20entry.png?VersionId=dA9jHGPMcm.dDbwk4QfxqWiY5bfh3UVt" />

The podium would incorporate retail uses fronting Atchison Street, commercial tenancies, landscaped communal areas, and pedestrian improvements along Mitchell Street. Vehicle access and loading would be consolidated via Atchison Lane.

Residents would have access to more than 665 sqm of communal indoor and outdoor spaces, while the development proposes 96 parking spaces across five basement levels.

The proposal also includes a commitment for 10 per cent of residential floor space to be allocated toward affordable housing through a monetary contribution.

COX said the tower form responds directly to the emerging high-density character of the precinct while seeking to maximise solar access, cross ventilation, and outlook from apartments.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="2163f85c-f63b-4be3-aafa-f8763976cec5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Article%20Feature%20Image%20%28Grid%29_5.png?VersionId=WiAmtIKJ6.ZQ41EtYEQ1fol7AeorKBlL" />

“The building is orientated towards north,” the Apartment Design Guide compliance report noted, adding that the tower’s slim form was driven by the constrained inner-urban site dimensions.

The design also incorporates landscaped setbacks and communal open space at podium level, intended to soften the interface with surrounding streets and improve pedestrian amenity.

The project adds to a growing wave of redevelopment proposals reshaping St Leonards and Crows Nest following the opening of the Sydney Metro City line and the NSW Government’s push for higher-density housing around major transport nodes.

Last week Stockland filed plans just down the road. They want to build a <a href="https://www.apartments.com.au/new-apartments/601-pacific-highway-st-leonards-nsw-2065">52-storey tower on Pacific Highway</a>.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-stockland-plans-52-storey-538-apartment-st-leonards-tower">First look: Stockland plans 52-storey, 538-apartment St Leonards tower&nbsp;</a>

First look: SP Setia targets St Leonards skyline with 40-storey TOD tower

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> has revealed plans for a new mixed-use tower at 10 Dangar Street, Wickham, advancing a proposal that would reshape the southern gateway to Newcastle’s city centre with one of the city’s tallest residential buildings.

The State Significant Development proposal, now on exhibition, seeks approval for a <a href="https://www.apartments.com.au/new-apartments/bowline-10-dangar-street-wickham-nsw-2293">43-storey tower</a> immediately adjacent to the Newcastle Interchange. The project would deliver around 200 apartments, including 42 affordable housing dwellings, alongside 99 co-living units, a 171-room hotel, retail space, and new public domain integrated through the site.

The scheme marks a significant escalation of plans previously approved for the site. Urban Property Group took over the prominent 2,904 sqm parcel, where excavation and demolition had already commenced under an earlier consent for a 14-storey mixed-use development.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="58a96dd9-407f-4d20-86b4-94e4bfeef74b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20podium.png?VersionId=LGlf08pdFGAZDzvx_CXC4XakHNZRuEE0" />

Designed by <a href="https://www.apartments.com.au/architects/sjb-architects">SJB</a>, the tower has been conceived as a landmark transit-oriented development anchored to the Newcastle Interchange precinct. The proposal includes 245 build-to-sell apartments across a mix of one, two, and three-bedroom residences, as well as two penthouses. Fifteen apartments and one operational unit are earmarked for NDIS housing. The co-living component would add a further 99 units, while the podium would accommodate retail uses and hotel facilities.

SJB said the site presents “a valuable opportunity to anchor the precinct by setting the standard for design, active ground planes and character at the key southern gateway.”

The architecture responds directly to the site’s position beside major transport infrastructure and within one of Newcastle’s fastest-evolving urban renewal precincts. The tower form sits above a sculpted podium designed to frame new public spaces, including a through-site pedestrian link connecting Station Street to Hannell Street, landscaped plazas, and activated retail edges.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="a7bd6ff0-f7db-4ce8-a6dc-ea56e72c6149" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20lanne.png?VersionId=xzf39VADyhj7zBQY2I9fx9vI62u2tuSb" />

The design report describes the project as part of the broader transition of Wickham into “a vibrant, high-quality mixed-use urban precinct” that leverages proximity to the station, open space, and regional connectivity.

A detailed public art strategy has also been prepared for the development. The strategy positions the project as “a transit-oriented development of state significance at the gateway to Newcastle’s city centre” and outlines a series of integrated artworks responding to Newcastle’s industrial and transport heritage.

Creative Road’s curatorial framework for the project, titled Unveil, draws on “stratified surfaces, carved volumes, and light-filled apertures” while referencing Newcastle’s transformation from an industrial city into a contemporary education and technology hub.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="77a882bb-14b1-4d28-99ff-9438e39508c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20site.png?VersionId=cevgo_vN0eKPK78P8YcEu3mKPLkpFqE7" />

The proposal is being advanced through the NSW Housing Delivery Authority pathway after being declared State Significant Development in June 2025. The accompanying scoping report states the development aims to “maximise the site’s proximity to the Newcastle Interchange by delivering transit-oriented development” while increasing housing supply and affordable housing provision within the Newcastle LGA.

Urban Property Group’s plans align with the long-term strategic vision established under the Wickham Master Plan, which identified the interchange precinct as suitable for substantial uplift in height and density. The current proposal would significantly intensify that vision, positioning the tower among the tallest developments proposed for Newcastle.

The site sits immediately north of the Newcastle Interchange, bounded by Dangar Street, Hannell Street, and Charles Street. It is surrounded by a rapidly growing cluster of residential towers and mixed-use projects that have emerged following the completion of the light rail and transport interchange.

First look: Urban Property Group unveils Newcastle’s latest tower at Wickham interchange

Bottega House has completed settlement of a landmark riverfront site in Macquarie Street, St Lucia, representing its first major Brisbane development.&nbsp;

Positioned on the banks of the Brisbane River, the <a href="https://www.apartments.com.au/new-apartments/180-macquarie-street-st-lucia-qld-4067">premium site at 180 Macquarie Street</a> features uninterrupted river frontage in one of Brisbane’s most tightly held residential precincts.&nbsp;

The proposed development, currently under assessment with Brisbane City Council, has been designed by <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/mim-design">Mim Design</a> and will deliver a boutique collection of premium residences positioned specifically for owner occupiers and downsizers.&nbsp;

The residences are set to redefine luxury apartment living in the area, with a focus on architectural quality, refined finishes, landscape integration and elevated amenities including curated wellness facilities, resort-style pools and recreation spaces rarely seen in the local market.&nbsp;

Exclusive sales for the project will be led by Keenan &amp; Byrne, ahead of an anticipated launch later this year.&nbsp;

Bottega House Managing Director Nick Malloch said the project reflects the group’s ambition to deliver a highly curated residential offering within one of Brisbane’s most tightly held precincts.&nbsp;

“This is an incredibly rare riverfront opportunity and one we have approached with a long-term perspective,” Malloch said.&nbsp;

“Our vision from the outset was to create a boutique collection of residences that feel more like private homes than traditional apartments, with generous proportions, refined finishes and exceptional amenity throughout."

Malloch says there is a&nbsp;lack of premium owner-occupier stock of this quality in the market, particularly for downsizers wanting space, privacy and a true lifestyle offering without compromise.&nbsp;

"Demand is expected to be strong given the scarcity of premium riverfront opportunities of this nature within Brisbane’s inner-west."&nbsp;

Bottega House secures landmark riverfront site in St Lucia 

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The arrival of the first piling rig officially marks the commencement of construction at SIERA’s new beachside apartment development, Exhale, in Northcliffe.

<a href="https://www.apartments.com.au/new-apartments/exhale-surfers-paradise-8-enderley-avenue-surfers-paradise-qld-4217">Exhale</a>, a glass-encased tower featuring 54 large-scale apartments at 8 Enderley Avenue, is SIERA’s third Gold Coast development. It follows the recently completed PIPIS Bilinga beachfront project, which achieved suburb-record prices, and the soon-to-be-completed Chevron Island development, Tapestry.

[smartcode_project:default project_id=112661 project_image_fid=359603]

<a href="https://www.apartments.com.au/developers/siera">SIERA</a> Founder and Managing Director Brent Thompson said the arrival of the piling rig represented a significant milestone for the development, which is scheduled for completion in late 2028.

Over the next month, around 260 piles are expected to be installed as work progresses on the basement structure. The building is anticipated to rise above ground level early next year, before unveiling its sculptural glass curtain wall, developed in collaboration with specialist façade engineers.

“The façade was designed to maximise panoramic coastal views while creating a distinctive architectural identity,” Thompson said.

[smartcode_project:default project_id=112661 project_image_fid=355935]

Designed by BDA Architecture, Exhale will comprise just 54 two- and three-bedroom residences across 26 levels, a level of low-density living rarely delivered in this beachside pocket between Surfers Paradise and Broadbeach.

The project has been conceived as a resident-only building, with no short-stay accommodation permitted. SIERA says the model is intended to appeal to long-term owner-occupiers rather than transient holiday demand.

[smartcode_project:default project_id=112661 project_image_fid=361052]

Residences have been designed with large-format layouts and expansive glazing, with most apartments featuring more than 30 metres of glass frontage to maximise natural light and ocean views.

The amenity offering spans two levels and centres on wellness and lifestyle, including a heated magnesium pool, sauna, yoga and Pilates studio, gymnasium, private dining facilities, cinema lounge, and dedicated surfcraft storage.

[smartcode_project:default project_id=112661 project_image_fid=359607]

More than half of the apartments have already sold. SIERA has also opened a sales gallery for Exhale at its Chevron Island commercial premises, near its Tapestry tower and the site of its second Chevron Island apartment development, which is slated to launch in early 2027.
</section>
</section>

[smartcode_project_cta:default project_id=112661]

SIERA kicks off construction at Northcliffe tower Exhale

APRA

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EXPERT OBSERVER
Since the federal election there appears to have been some strength returning to the housing market.  A number of factors have contributed to this apparent improvement in housing confidence, including:
1.       An unexpected election win to the Coalition.  Typically a change of government wouldn’t have too much of an impact on housing sentiment however, the Labor opposition took to the election some policies which would have influenced the market, particularly the investor segment.  Specifically these were reforms to negative gearing which would have seen this taxation policy reserved for new dwellings only (with grandfathering provisions for current investment property owners) as well as a halving of capital gains discounts.
2.       Two 25 basis point cuts to official interest rates.  Since the election, the Reserve Bank has now cut official interest rates in both June and July by 25 basis points.  While lower interest rates signal a requirement for economic stimulus, for mortgage holders lower rates mean cheaper mortgages if they refinance, a potential to reduce repayment amounts or paying off more of the principal component if they choose to make no changes to their mortgage.
3.       The Australian Prudential Regulation Authority (APRA) has proposed amending guidance on mortgage lending.  Since the inception of macroprudential tools in December 2014, APRA has required lenders to assess the ability of borrowers to repay their mortgage at either an interest rate of above 7% (typically 7.25%) or a buffer of 2% over the loans interest rate, whichever is the larger.  With mortgage rates the lowest they have been since the 1960s the buffer has become restrictive and APRA is now proposing to remove the 7% benchmark and change the requirement to an interest rate buffer of 2.5% above the loans interest rate.
The federal election was held on the 18 May and the result was known that evening.   APRA published their proposal to amend their guidance on mortgage lending on 21 May and was given the go-ahead by APRA on 5 July and the first of the two cuts to the cash rates occurred on 4 June.  The week following the election, auction clearance rates was slightly lower in Melbourne while in Sydney it increased from 56.5% to 62.1%.  Over the weeks following the election, auction clearance rates in Melbourne have averaged 64.4% compared to an average throughout 2019 prior of 53.6%.  In Sydney, auction clearance rates have averaged 62.5% since the election compared to 53.6% prior.  
Importantly, the CoreLogic Home Value Index has been showing moderating declines each month throughout 2019 and although values are still falling nationally, Sydney and Melbourne recorded their first increases since 2017 in June.
Although all of these factors are seemingly positive for the housing market it is important to note that APRA has only just announced that they are actually amending their guidance on mortgage lending. 
Furthermore, from July 1 there were some further changes that will impact on the mortgage lending space, the details of which are below:
1.       The expansion of positive credit reporting. This change will provide lenders with more information on lenders credit history.  Specifically, credit account histories including: type of account, date the account was open, current credit limit and account closed date as well as two years of repayment history of accounts including information on late or defaulted payments.  Given this lenders will have a lot more information about borrower’s credit histories and will seemingly have fewer excuses for providing loans to those that aren’t credit worthy.  By the end of September, lenders will be required to share 100% of specified credit data, providing a more complete profile of borrower debt levels and credit worthiness. 
2.       The adoption of the new Banking Code of Conduct.  While this is not a legally enforceable document, it does set out the standards of practice and service for the banking sector.  It has been significantly amended and according to the Code in some areas, it sets higher standards than the law.  You can see the code here: <a id="LPlnk427005" href="https://www.ausbanking.org.au/wp-content/uploads/2019/06/Banking-Code-of-Practice-2019-web.pdf" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable">https://www.ausbanking.org.au/wp-content/uploads/2019/06/Banking-Code-of-Practice-2019-web.pdf</a>
So on one hand you can see the borrowing is going to become somewhat easier as APRA makes the changes it is proposing and mortgage rates have reduced on the back of the two interest rate cuts we’ve had.  On the other hand, the expansion of comprehensive credit reporting gives lenders much more insight into the creditworthiness of borrowers and the new banking Code of Conduct appears to be requiring much higher standards from the banks, as well as executive accountability for conduct as prescribed under the Banking Executive Accountability Regime (BEAR).  Furthermore, banks continue to have a very close focus on living expenses assessment when deciding whether a borrower is credit worthy.
Given all of this, we believe that mortgage credit is going to become a little more accessible however, there will remain a level of conservatism and caution from lenders.  Especially given the Royal Commission that has recently occurred and the fact that they have much more data available to them in order to make decisions about the credit worthiness of borrowers.
CAMERON KUSHER is the head of research for the Australian division of CoreLogic
Kusher regularly posts on the <a href="https://www.corelogic.com.au/news" target="_blank">CoreLogic website</a>.
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ckusher-ujnxiKuFQs

What APRA (potentially) giveth does comprehensive credit reporting take-away? CoreLogic's Cameron Kusher

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<div>
APRA announced further measures to cool certain sectors of the housing market last week.
Every man and his dog has written about this already, with a few excellent insights and some interpretations that were just plain weird - so let's keep this post as short as possible, shall we? 
OK, here we go...
APRA wants lenders to place strict internal limits on the volume of interest-only lending at loan-to-value ratios (LVRs) above 80 percent, so firstly some lenders will immediately require a 20 per cent deposit for this type of loan. A shift in this direction has already taken place to some extent, so the impact of this may be marginal.
Lenders must now also ensure there is "strong scrutiny and justification of any instances of interest-only lending at an LVR above 90 percent", so interest-only loans with a deposit of less than 10 per cent will generally go the way of the dodo and the lo-doc loan. 
Again, this has by and large already happened, but will have the ongoing effect of knocking a few more first-time buyers out of the market, while having no impact on incumbent owners with existing equity.
<a href="https://www.propertyobserver.com.au/images/2017/04/02/C2.jpg" target="_blank">Click to enlarge </a>
</div>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/04/02/C2.jpg" alt=""></div>
<div> </div>
<div>Speed limit</div>
<div> </div>
<div>The existing 10 per cent cap on growth for investment mortgage books will remain in place. I've spoken to branch managers and bank owners, and their view is generally that this won't have too much impact since new loans can always be pushed back a month.</div>
<div> </div>
<div>But a third impact may be that some lenders have to wind their necks in just a little bit further. </div>
<a href="https://www.propertyobserver.com.au/images/2017/04/02/C4.jpg" target="_blank">Click to enlarge</a> 
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/04/02/C4.jpg" alt=""></div>
 
<div>Fourthly, there will likely be a shift in the investor loan segment of the market towards private financiers or non-bank lenders, perhaps some of whom may offer commercial-style rates. </div>
<div> </div>
<div>Fifthly, banks have been presented with an open goal here for raising the rates on their investor loans, so rates will inevitably be ratcheted higher in due course. </div>
<div> </div>
<div>Switch...</div>
<div> </div>
<div>Between July 2015 and February 2017 some $50 billion of loans were switched from investor to owner-occupier mortgages following the introduction of an interest rate differential between the two types of loan. A sixth impact will therefore be yet further switching of loan purpose. </div>
<a href="https://www.propertyobserver.com.au/images/2017/04/02/C3.jpg" target="_blank"> Click to enlarge</a>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/04/02/C3.jpg" alt=""></div>
Why worry?
<div>
So far, so unremarkable. But there's more...
</div>
<div> </div>
<div>By far the most important impact will be a new 'speed limit' on interest-only loans in Australia, with APRA now aiming to limit the flow of new interest-only lending to 30 per cent of total new residential mortgage lending.</div>
<div> At the heady peak more than 45 per cent of new loans were interest-only in nature, with investors in particular favouring this type of product in order to maximise their tax deductible expenses.  </div>
<div> </div>
<div>A seventh impact will be that new owner-occupiers wanting to use this type of product in future may be given their marching orders, and possibly some aged borrowers too. </div>
<a href="https://www.propertyobserver.com.au/images/2017/04/02/C1.jpg" target="_blank">Click to enlarge</a>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/04/02/C1.jpg" alt=""></div>
<div class="separator"> </div>
<div>Eighthly, if that is even a real word, two of Australia's major banks have been rolling over interest-only loans more or less automatically at the end of the interest-only period, and these lenders will almost certainly now require a far more stringent assessment. </div>
<div> </div>
<div>Of course, few borrowers will default on a loan when they've seen the value of their Sydney property double over the preceding five years, though they might choose to sell off their investment if the repayments become too arduous. The impact in markets where dwelling prices have declined might prove to be an altogether more dramatic story.</div>
<div> </div>
<div>The ninth impact - perhaps an over-arching point really - is that far too many investors have simply assumed they will continue rolling interest-only debt ad infinitum, and they may now have to get it into their heads that they will be paying back principal sooner or later.</div>
<div> </div>
<div>Seemingly every other week an article surfaces featuring 'young gun investors' with a dozen interest-only loans having been used to buy high-yielding properties in far-flung areas. </div>
<div> </div>
<div>Credit markets tend to move in cycles, so APRA's changes may or may not be permanent, but in the prevailing market conditions some borrowers could get caught short if they've simply planned to continue rolling interest-only debt on an endless loop. </div>
<div> </div>
<div>Oh, and there may be further macroprudential measures to come!</div>
<div> </div>
<div>
PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.
His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank">Four Green Houses and a Red Hotel</a>.
</div>
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pwargent-M4siyDbqQY

APRA offers further measures to cool certain housing market sectors

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Expert Observer
It was announced in the 2017 Budget speech that the regulator APRA will explicitly be allowed to differentiate loan controls by location.
This is another move signalling that politicians and regulators don't trust banks to lend responsibly, while simultaneously inferring that they know better than the market what 'should' be happening in terms of property markets and lending activity (which may be a positive thing or a very worrying development depending on your outlook!).
Practically speaking this means that APRA might look to restrict the flow of credit into 'hot' housing markets - basically, Sydney - while presumably steering clear of intervention in markets where prices and rents are in a multi-year freefall (such as Darwin, Gladstone, or indeed any number of of Australia's resources regions).
This all sounds jolly good on paper, until you think about all of the potential ramifications of regulatory intervention. There isn't the space here to go into detail on this point, but it's a concern!
Lending finance rebounds
The March 2017 Lending Finance figures, which strangely never seem to get any media coverage, saw total lending jump tidily from $67.6 billion to $72.9 billion in seasonally adjusted terms.
<a href="https://1.bp.blogspot.com/-2f6hTXVdfZA/WR4AGIWCN3I/AAAAAAAAj6o/BW7FQ9Afn98N7wzbfoN5JlhkrJZtkOgQgCLcB/s640/A1.jpg" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/19/rsz_lendingfinace.png" alt="">
Lending to homebuyers was relatively steady in the lead-up to APRA's latest round of macroprudential curbs, while nationally there was a moderate increase in lending to property investors (classified below under commercial lending).
It's generally reported that lending for real estate is unproductive and risky, while lending to business is productive and a good thing. This may be true to an extent, though there are many sub-trends to take into account.
Overall commercial lending saw a neat increase in the month of March to be solidly higher year-on-year, even if the recent trend series is flat.
Renovations rose to a 6.5 year high in March 2017, as Aussies apparently shunned stamp duties and trading up for staying put and renovating instead, though looking at the numbers in their historical context the 'renovation boom' story seems a bit less enticing.
Splitting out commercial finance fixed loans by industry shows how lending into the mining sector has all but evaporated, declining by a further 46 per cent over the year to March. Commercial lending to the mining industry has fallen to about a quarter of the level seen at the peak as the resources construction cliff now approaches its nadir.
Despite this massive contraction, annual lending for construction continues to expand at a sprightly double digit pace, a trend which belies Australia's over-reliance on the residential building sector.
Investor loans diverge
Carving up loans to property investors by state, it's clear that Sydney investors don't believe in the apartment oversupply and have been doubling down on harbour city real estate with a vengeance.
Lending for investment in New South Wales surged to $6.2 billion in March - 39 per cent higher than for the same month last year - signalling a huge rebound since APRA's first round of macroprudential restrictions.
There was also something of an increase in investor lending in Victoria which will warrant careful observation.
<a href="https://4.bp.blogspot.com/-FvHnxzfoySg/WR4AGTk0z8I/AAAAAAAAj6s/fAgDQzINy_seIhISKqHG962BVPuXvel_ACLcB/s640/A3.jpg" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/19/rsz_investorloansbystate.png" alt="">
The massive divergence in fortunes across the states in the prevailing low interest rate environment is ultimately what led to APRA's new powers to target lending in specific neighbourhoods.
While Sydney property has been burning up, property investor loan volumes in the Northern Territory have collapsed to their lowest level in 11 years as prices and rents in Darwin continue to fall.
The wrap
Overall, it was a stronger month for lending finance in aggregate, with a sizeable lift in commercial finance.
The housing market figures pre-date APRA's announcement at the end of the month of March that new restraints would be applied to interest-only lending.
What the figures do show is the massive divergence in investor sentiment between the resources states and Sydney, and, to a lesser extent, Melbourne.
If this continues APRA may be called upon to use its new powers sooner rather than later.
PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.
His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.
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APRA may deploy its 'special powers': Pete Wargent

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GUEST OBSERVATION 
Last week the Australian Prudential Regulation Authority (APRA) sent an <a href="https://www.apra.gov.au/capital-management">extraordinary letter</a> to Australia’s banks and insurers, essentially telling them to cut their dividend payments to shareholders in light of the coronavirus crisis.
It said it expected banks and insurers to “seriously consider deferring decisions on the appropriate level of dividends”.
<a href="https://images.theconversation.com/files/326728/original/file-20200409-188923-1pxiqkj.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/326728/original/file-20200409-188923-1pxiqkj.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=237&amp;fit=clip" alt=""></a>
Read the full <a class="source" href="https://www.apra.gov.au/sites/default/files/2020-04/Capital%20management.pdf" target="_blank">APRA letter to financial institutions, April 7, 2020</a>.
Where a board was confident that it could approve a dividend on the basis of robust stress testing that had been discussed with APRA, it should “nevertheless be at a materially reduced level”.
Where dividends were paid those payments should be “offset to the extent possible through the use of dividend reinvestment plans and other capital management initiatives”.
With Australia’s big four banks potentially suffering big losses due to mortgage defaults among other things, their capital bases are at risk.
Equity research analysts at <a href="https://www.nytimes.com/reuters/2020/04/08/world/asia/08reuters-health-coronavirus-australia-banks">Macquarie</a> outline a scenario under which bank losses reach A$25-27 billion per bank, and their capacity to pay dividends (without raising equity) materially diminishes
Why did APRA do it?
The letter isn’t a “ban” on dividends, and APRA wasn’t telling the banks anything they don’t already know. So why did it bother?
The answer lies in the economics of how investors react to firms that don’t pay the dividends expected.
Seen through that lens, APRA was very clever indeed.
In a classic 1985 paper <a href="https://onlinelibrary.wiley.com/doi/epdf/10.1111/j.1540-6261.1985.tb02362.x">Merton Miller and Kevin Rock</a> provided a theoretical answer to the puzzle of why paying dividends seems to signal good news to investors, and why cutting dividends seems to signal bad news, and cuts the share price.
In the Miller-Rock model, the managers of a firm have better information about its future prospects than outside investors.
To keep it simple, imagine there are two “types” of firms: good and bad.
Good firms have high future cashflows, bad ones have low ones.
Only the managers know which is which.
Because both types of firm can earn something from investing in the business, it is in the interest of both (more so the good firm) to invest rather than pay out dividends.
Miller and Rock wondered whether what each type of firm did provided clues to investors about whether the managers thought it was good or bad.
Surprisingly, they found that usually good firms will pay high dividend and bad firms no dividends.
It is surprising because good firms are sacrificing more by paying dividends.
Their logic was that the bad firms were the least able to afford good dividends and that good firms knew this and paid high dividends to signal they could afford to.
It has a striking implication with <a href="https://www.nber.org/papers/w4244">strong empirical support</a>.
If a firm gets a temporary negative shock to its cashflow or investment prospects it won’t want to cut its dividend lest investors think it has turned “bad”.
It will borrow or even do short-term damage to its prospects in order to maintain investor confidence and hence a high stock price.
Get out of jail free
Notice that the signalling theory of dividends implies that the managers of firms would like to cut dividends in tough financial times, and probably should, but they worry about sending a bad signal to investors.
<img src="https://images.theconversation.com/files/328304/original/file-20200416-192698-pj1hzp.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=237&amp;fit=clip" alt="">
An announcement like APRA’s provides them with cover – an excuse.
And it does more. It is what economists refer to as a “coordination device”.
If the big four banks got together and agreed cut their dividends by the same amount, say in half (which would be illegal) investors would get no differential signal and no new information about which bank was “good” and which was “bad”.
APRA’s message opens up the possibility of all four coordinating without talking – merely by following advice.
As 2005 Nobel laureate Thomas Schelling put it in his book, <a href="https://www.hup.harvard.edu/catalog.php?isbn=9780674840317&amp;content=reviews">The Strategy of Conflict</a>,
"People can often concert their intentions or expectations with others if each knows that the other is trying to do the same."
And they’ve an interest in coordinating. If one bank falls over during this crisis and needs to be bailed out that’s bad for all of them. All of their stock prices will tank, it will be hard for them to raise the capital they need to fund their operations.
Australia’s banks compete, but they are “frenemies”, right now more friends than enemies.
We will have to wait and see if they pick up the get-out-of-jail card APRA has handed them and cut dividends together.
APRA could have taken a tougher stance. It could have banned dividends. But that would have sent a bad signal to domestic and international capital markets about the solvency of our banks.
I have been critical of some of APRA’s moves in recent years. But this one is brilliant. Let’s hope the banks can see a life raft when they’re offered one.<img src="https://counter.theconversation.com/content/136407/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
<a href="https://theconversation.com/profiles/richard-holden-118107">Richard Holden</a>, Professor of Economics, <a href="https://theconversation.com/institutions/unsw-1414">UNSW</a>
This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/vital-signs-apras-extraordinary-gift-to-banks-under-pressure-to-pay-dividends-136407">original article</a>.
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rh-YsoTT2xMuQ

APRA's extraordinary gift to banks under pressure to pay dividends

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The Australian Prudential Regulation Authority (APRA) announced temporary changes to its expectations regarding bank capital ratios, to ensure banks are well positioned to continue to provide credit to the economy in the current challenging environment.
Over the past decade, the Australian banking system has built up substantial capital buffers. The highest quality form of capital, Common Equity Tier 1 (CET1) capital, reached $235 billion at the end of 2019. As a result, banks are typically maintaining capital levels well above minimum regulatory requirements.
In 2017, APRA set benchmark capital targets for banks to enable them to be regarded internationally as unquestionably strong (which was a recommendation of the 2014 Financial System Inquiry). These benchmarks are well above current minimum regulatory requirements. For the four major banks, for example, this benchmark equated to having a CET1 ratio of at least 10.5 per cent of risk-weighted assets. A lower benchmark applies for smaller banks. In comparison, the actual CET1 ratio of the banking system by the end of 2019 had reached 11.3 per cent. 
APRA is advising all banks today that, given the prevailing circumstances, it envisages they may need to utilise some of their current large buffers to facilitate ongoing lending to the economy. This is especially the case for banks wishing to take advantage of new facilities announced today by the Reserve Bank of Australia to promote the continued flow of credit. Provided banks are able to demonstrate they can continue to meet their various minimum capital requirements, APRA would not be concerned if they were not meeting the additional benchmarks announced in 2017 during the period of disruption caused by COVID-19.
APRA Chair Wayne Byres said, “APRA has been pursuing a program to build up the financial strength of the system for many years, when banks had the capacity to do so. As a result, the Australian banking system is well-capitalised by both historical and international standards.
“APRA’s objective in building up this capital strength has been to ensure it is available to be drawn upon if needed in times such as this. Today’s announcement reflects the underlying strength of the system: even if the banking system utilises some of its current large buffers, it will still be operating comfortably above minimum regulatory requirements,” Mr Byres said. 
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j.ballantyne1990-6AQqhLzZaK

Temporary changes to expected bank capital ratios: APRA

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EXPERT OBSERVER
APRA’s property exposures data is published each quarter and provides a summary of lending by ADIs over the quarter.  The data is valuable because it gives much more insight into new lending than what is available from the monthly housing finance data, which is published by the Australian Bureau of Statistics (ABS).
<img class="align-center" src="https://www.corelogic.com.au/sites/default/files/inline-images/Annual%20Change%20in%20value%20of%20new%20mortgage%20lending%20approvals.PNG" alt="Annual Change in value of new mortgage lending approvals.PNG" width="998" height="365" data-entity-type="file" data-entity-uuid="62db70a1-0572-49d6-84c7-813f3dd4a92f" data-image-style="" data-responsive-image-style="wide" data-zoom-image-style="_as_uploaded" data-mfp-src="https://www.corelogic.com.au/sites/default/files/inline-images/Annual%20Change%20in%20value%20of%20new%20mortgage%20lending%20approvals.PNG">
 The latest data showed that the value of lending to owner-occupiers was 9.3% higher in the June 2019 quarter than the March 2019 quarter and for investors it was 13.8% higher.  Despite the quarterly increase, the value of lending to owner-occupiers was -14.4% lower year-on-year and for investors it was -17.5% lower.  As the first chart highlights there has been a steady decline in housing lending demand over recent years however, the latest quarter suggests the flow of housing credit may have reached a turning point. One of the features of the market over recent years has been the reduction in new lending on interest-only terms.  Like overall lending, interest-only lending was actually 17.0% higher over the June quarter however, it was -19.6% lower year-on-year.  Interest-only mortgages made-up just 15.8% of new mortgages over the quarter, which was slightly higher than the recent low of 14.9%, but much lower than the decade average of 32.5%.  The reduction in interest-only lending has been driven by much higher mortgage rates for this product.  In fact, if you look at the total outstanding portfolio of interest-only mortgages it has fallen to $359.0 billion, which is its lowest value since September 2012 and its lowest overall share of outstanding mortgages, at 21.6%, any time since March 2008.
<img class="align-center" src="https://www.corelogic.com.au/sites/default/files/inline-images/Value%20and%20share%20of%20total%20new%20lending%20for%20interest-only%20purposes.PNG" alt="Value and share of total new lending for interest-only purposes.PNG" width="1033" height="378" data-entity-type="file" data-entity-uuid="b4786622-79bb-45e2-ad19-fa2b95a9551b" data-image-style="" data-responsive-image-style="wide" data-zoom-image-style="_as_uploaded" data-mfp-src="https://www.corelogic.com.au/sites/default/files/inline-images/Value%20and%20share%20of%20total%20new%20lending%20for%20interest-only%20purposes.PNG">
 Looking at other types of non-standard lending, over the quarter low-documentation loan approvals increased 33.6%, loans approved outside serviceability increased 4.1% and other non-standard loan approvals fell -21.7%.   Year-on-year, the changes were recorded at -52.8% for low-documentation loan approvals, -36.6% for loans approved outside of serviceability and -42.2% for other non-standard loans.  Low documentation loans were just 0.1% of the value of loans approved over the quarter while loans approved outside of serviceability were 4.0% (their lowest share since December 2017) while other non-standard loans were also just 0.1%.
<img class="align-center" src="https://www.corelogic.com.au/sites/default/files/inline-images/Quarterly%20new%20lending%20by%20loan%20types.PNG" alt="Quarterly new lending by loan types.PNG" width="1040" height="394" data-entity-type="file" data-entity-uuid="0c10c8f9-a868-4b35-8664-a5ba5c47ca51" data-image-style="" data-responsive-image-style="wide" data-zoom-image-style="_as_uploaded" data-mfp-src="https://www.corelogic.com.au/sites/default/files/inline-images/Quarterly%20new%20lending%20by%20loan%20types.PNG">
 The latest data shows an uptick in high loan to valuation ratio (LVR) lending however, it remains well below historic levels.  Lending with an LVR greater than 80% means that the borrowers will typically have to take out lender’s mortgage insurance (LMI).  Over the quarter, there was $17.9 billion worth of mortgages written with an LVR greater than 80%, which was 22.4% of all commitments over the quarter.  The 22.4% share was the highest since December 2015 but remains well below its peak of 37.6% in March 2009.  
<img class="align-center" src="https://www.corelogic.com.au/sites/default/files/inline-images/Value%20and%20share%20of%20total%20new%20lending%20with%20LVR.PNG" alt="Value and share of total new lending with LVR.PNG" width="991" height="357" data-entity-type="file" data-entity-uuid="58936e33-9672-4d5b-9568-a622e834b8ba" data-image-style="" data-responsive-image-style="wide" data-zoom-image-style="_as_uploaded" data-mfp-src="https://www.corelogic.com.au/sites/default/files/inline-images/Value%20and%20share%20of%20total%20new%20lending%20with%20LVR.PNG">
 Overall, the data from APRA shows that riskier lending; those loans with a high LVR, interest-only or non-standard mortgages remain a low proportion of new mortgages that are being written.  In saying that, there seems to have been a slight increase in the risk appetite over recent quarters and with macroprudential policies eased further during recent months, it wouldn’t be a surprise to see a further moderate increase in demand for non-standard and higher LVR mortgages over the coming quarters.
CAMERON KUSHER is the head of research for the Australian branch of CoreLogic.
Kusher regularly posts on the <a href="https://www.corelogic.com.au/news" target="_blank">CoreLogic website</a>.
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Riskier lending remains low according to APRA: Cameron Kusher

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The Reserve Bank of Australia has just announced that the official cash rate will remain at a record low of 1% as they continue to assess the impact of the June and July cash rate cuts.

The rate was lowered for the first time in almost three years in a bid to alleviate financial strains by reinvigorating household spending and attempting to boost employment rates across the country. According to CommSec’s Tom Piotrowski, Australia's economy has been growing at the slowest pace in almost a decade, however, an increase in clearance rates, rising home values, and greater housing demand could allude to a brighter outlook for Q4. 

<h2>IT’S ARGUABLY “EASIER” TO BUY PROPERTY IN THE CURRENT MARKET</h2>

In July Apartments.com.au <a href="/news/a-borrower-s-market-the-reserve-bank-of-australia-cuts-cash-rate-to-a-record-low">reported on the announcement of the 1% cash rate</a>, concluding that the property market appears to be in favour of borrowers at present, given the more relaxed lending constraints and lower interest rates on home loans.

We reached out to Jeremy Toeng, Financial Director and Lending Advisor at Chatham House Financial, who shared a similar opinion regarding the current property climate following the two 25 basis point cuts and APRA's announcement of a lowered minimum interest rate serviceability buffer.

<blockquote>
“Following both the Royal Commission and Federal Election, we feel that consumer sentiment has improved which is leading to a noticeable increase in activity, particularly for those looking to purchase property. We feel this is largely due to an easing of lending criteria which has helped consumers with affordability, as well as a reduction in interest rates.”
</blockquote>

Jeremy Toeng, Chatham House Financial Director &amp; Lending Advisor

<h2>CONCERNS ABOUT MORTGAGE SERVICEABILITY</h2>

CoreLogic Research Director Tim Lawless explains that with the low mortgage serviceability there will be an underlying concern that the issue of high household debt will remain unresolved.

<blockquote>
"...The recent step up in the pace of value growth is likely to raise some concern that the lowest mortgage rates since the 1950s is fuelling renewed housing market exuberance at a time when household debt remains around record highs.”
</blockquote>

Tim Lawless, CoreLogic Research Director via <a href="https://www.news.com.au/finance/economy/interest-rates/official-cash-rate-remains-at-1-per-cent-following-reserve-banks-september-meeting/news-story/76606fdc5d68d31e127660261d0948d0">news.com.au</a>

Lawless suggested that a solution to this could be limiting the amount given to borrowers on high debt-to-income ratios, or stricter limits on the loan to value ratio (LVR) which compares your loan amount with the value of your property – meaning the lower the 'LVR', the lower the financial risk for the bank. 

<h2>COULD PROPERTY VALUE GROWTH INDICATE A GOOD TIME TO BUY?</h2>

<a href="/guides/how-australia-s-interest-rate-cuts-could-impact-first-home-buyers">Our research showed</a> that while term deposits would experience a drop in interest return from banks, property could potentially be a safe investment, given the fact that property values have shown an exponential increase in recent months.

<blockquote>
“In line with rate cuts in June and July, housing values in Australia’s two largest cities have recorded a lift, with dwelling values rising 1.9 per cent and 1.8 per cent in Sydney and Melbourne over the past three months.” 
</blockquote>

Tim Lawless, CoreLogic Research Director via <a href="https://www.news.com.au/finance/economy/interest-rates/official-cash-rate-remains-at-1-per-cent-following-reserve-banks-september-meeting/news-story/76606fdc5d68d31e127660261d0948d0">news.com.au</a>

Jeremy Toeng also weighed in on the current markets, concluding that spring is looking up for both developers and buyers,

<blockquote>
“On the property front, clearance rates are increasing and whilst overall stock levels are low, we think this will increase as we head into spring which is traditionally the busiest time of the year in the property market.”
</blockquote>

Jeremy Toeng, Chatham House Financial Director &amp; Lending Advisor

<a href="/guides/off-the-plan-property-buyer-confidence-surges-post-election">In May earlier this year</a>, CBRE’s Andrew Leoncelli also predicted that Q4 would be a good time for developers to take their projects to market, given an uplift in demand for property. It'll be interesting to see how Q3 and Q4 play out, and whether the property market maintains upwards momentum. 

Lead image credit: Daniel Chen
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Olivia Round

Is now the best time to buy property? Australia's official cash rate to remain at 1%

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The Australian Prudential Regulation Authority (APRA) has announced that it has loosened the serviceability restrictions on home loan mortgage assessments.
It will allow borrowers to lift the size of their loans as lenders will be allowed to provide mortgages up to 14 per cent larger.
In a letter to lenders issued Friday, APRA confirmed its updated guidance on residential mortgage lending.
They will no longer expect them to assess home loan applications using a minimum interest rate of at least 7 per cent or 7.25 per cent which has been the common industry practice.
Lenders will use a revised interest rate buffer of at least 2.5 per cent over the loan’s interest rate.
AMP Capital chief economist Shane Oliver noted the prudential changes were yet to have a real impact, although they would have helped sentiment at auctions.
“The interest rates cuts and the election result are the main factors,” he said. 
Federal Housing Minister Mich­ael Sukkar said yesterday there was renewed confidence and “tentative green shoots” in the housing market.
“With the dark clouds of Labor’s housing taxes — abolishing negative gearing and doubling capital gains tax — gone after the election, two successive interest rate reductions and the Aust­ralian Prudential Regulation Authority’s sensible changes to the serviceability buffer, there are good reasons to be confident about the Australian housing market,” he said.
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APRA loosens home loan serviceability restrictions 

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Banks continue to turn their backs on riskier home loans, as the value of new interest-only and low doc loans hit record lows, according to APRA data released today.
APRA’s Quarterly ADI Property Exposures for the March 2019 quarter shows the value of new loans to owner-occupiers fell by 17.6 per cent from the previous quarter, while the value of new loans to investors fell by 18.7 per cent in the same time frame.
The value of new interest-only loans fell by 22.5 per cent between December and March to 14.9 per cent of all loans, the lowest percentage share in APRA’s records dating back to 2008. 
RateCity.com.au research director Sally Tindall said banks were continuing to be hyper-vigilant in the wake of the Royal Commission, despite the easing of regulations.
“APRA might have loosened the strings on interest-only and investor lending but the banks are still ultra-cautious when it comes to high risk loans,” she said.
“APRA had wanted less than 30 per cent of new loans written to be interest-only. The banks have well and truly smashed this out of the park.
“Not only do interest-only loans represent just 14.9 per cent of all new loans written, they also represent just 23.3 per cent of the banks’ entire loan books, according to the most recent data,” she said.
<img src="https://www.urban.com.au/images/2019/6/19/Riskier.JPG" alt="">
 
The data released today by the Australian Prudential Regulation Authority showed that over the past 12 months the customer owned banking sector’s housing loans have increased by 8 per cent while the major banks grew by just 2.6 per cent.
Australia’s customer owned banking institutions now hold more than $119 billion in assets, an increase of 1.6 per cent compared to the previous quarter.  Consumers are also choosing to place their deposits with customer owned banking institutions. The sector now holds more than $101 billion in deposits. The growth in deposits shows a 6.5 per cent year on year increase in deposits. Customer Owned Banking Association CEO Michael Lawrence said consumers are sending a clear signal to the major banks. “Consumers are sending a very clear message to the major banks; either put our interests first, or we’re going somewhere that will. “The latest figures from APRA paint a clear picture of a sector that is continuing to grow as more Australians begin considering who it they choose to bank with. “Australians want banking institutions they can trust to put their interests first and to do the right thing by them. After the findings of the Financial Services Royal Commission it’s no surprise people are looking beyond the ‘Big Four’. “Consumers can see through the spin of the major banks. They know a leopard can’t change its spots, that’s why they’re taking their banking elsewhere"
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