New measures to restrict investor lending are unlikely to achieve their hoped-for goal of bringing down prices in Australia's surging housing market, ratings agency Moody's has warned.
Moody's says recent steps taken by regulators the Australian Prudential Regulation Authority (APRA) and the Australian Securities Investments Commission (ASIC) to crimp investor lending and calm rampant house price growth are a positive for the stability of the banking sector.
The ratings agency said APRA's move to limit interest-only loans to 30 per cent of new home lending, and ASIC's stepped-up monitoring of lending are credit-positive for the banks because they will curb the growth in riskier home loans amid rising house prices and high household debt.
"It remains to be seen on how effective they will be in moderating house price appreciation, particularly when low interest rates continue to support housing demand," Moody's Investors Service vice-president and senior analyst Daniel Yu said in a statement on Tuesday.
"In summary, while the latest measures and interest rate increases by the banks on interest-only loans will have some impact on demand for housing, we continue to expect upward pressure on house prices in Australia in an environment of low interest rates."
Banks must also ensure that growth in housing investment mortgages remains "comfortably" below the 10 per cent limit introduced in December 2014 under the new, stricter regulations.
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