Consumer Lending in Australia - New Market Research Report

The Reserve Bank of Australia continues to lower the cash rate

Following a sequence of eight rate cuts by the Reserve Bank of Australia (RBA) since 2011, in 2015 the RBA proceeded with two additional reductions of the official cash rate leaving it at 2%. Efforts to stimulate the economy and neutralise the effect of the mining industry slowdown were the key factors prompting the RBA’s decision.

Intense competition in housing lending benefits home buyers

Lower interest rates have fuelled a surge in property prices and fierce competition in home lending in Australia, despite the fact that banks did not pass on the latest official interest rate cuts in full to consumers. Aggressive pricing and discounting of interest rates on mortgages have attracted the interest of home buyers.

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Regulatory pressure to limit property investment lending

In December 2014, the Australian Prudential Regulation Authority (APRA) announced tighter home lending standards, particularly for property investors, as concerns about the risk of an overheating property market increased. The new lending standards aimed to ensure that banks kept growth in property investment lending to 10% or less. However, by March 2015 official statistics revealed that APRA measures did not have the expected effect with investor loans growing four times faster than owner-occupier mortgages, and the proportion of first homebuyer loans at an 11-year low.

Peer-to-peer lending gains momentum

Peer-to-peer lending has gained momentum in Australia, as some of the new entrants have received important endorsements, such as the SocietyOne start-up, which received an endorsement from a consortium backed by Rupert Murdoch’s News Corporation, and by private investment companies controlled by Crown Resorts chairman James Packer and Seven chairman Kerry Stokes.

Slower growth expected over the forecast period

Consumer lending is expected to post slower value growth in outstanding balance at constant 2015 prices over the forecast period, compared with the review period. This is largely due to the measures on mortgages set out by APRA. Under the new standards, homebuyers, particularly those looking to buy as an investment, will have to meet more-stringent regulations when applying for mortgages, which will hinder consumer lending growth in the forecast period.Report Overview

Discover the latest market trends and uncover sources of future market growth for the Consumer Lending industry in Australia with research from Euromonitor's team of in-country analysts.

Find hidden opportunities in the most current research data available, understand competitive threats with our detailed market analysis, and plan your corporate strategy with our expert qualitative analysis and growth projections.

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