Now I’m not
talking about interest rates here, but a borrower's actual access to credit.
Rising interest rates tend to prompt lenders to tighten their lending standards
so borrowers can’t borrow as much.
Banking Regulator APRA was concerned about the rapid growth in lending to
property investors which led to steep increases in property prices in 2014, it
instructed the banks and other lenders to be more cautious and set stricter
criteria for determining whether borrowers could repay their loans if interest
rates were to change.
warning had the desired effect and the share of new loans to investors fell
from over 40% during 2014 -15 to less than 30% the next year.
On the flip
side, during the pandemic boom, banks eased lending standards in a move
designed to free up credit and revive the economy - and it worked, hence the
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Thursday, 31 August 2023