Low-deposit lending fell to a record low in the March quarter on the available data series.
High debt-to-income lending has also dried up, falling to record lows.
Interest-only loans also fell to a record low 11.1 per cent of outstanding loans, which will suck a lot of dollars out of the economy, but investors aren't going to be much interested in the rental market this cycle until rents in Sydney and Melbourne rise by approximately 50 per cent.
Low-doc lending is also at a record low, playing almost no role at all in the Aussie housing market these days.
Levers or handbrake
On the one hand, the removal of more and more risk from lending is obviously commendable.
On the other hand striving to remove all of the stressors doesn't necessarily make for a stronger financial system, instead allowing different risks to build over time.
Moreover, we're heading for a chronic shortage of housing...and especially rental housing in Sydney and Melbourne.
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Recession risks build
Bill Evans discussed the latest interest rate hike here, and the likely deterioration in the economy in the second half of 2023.
The economy has never seen such a rapid rate of tightening, with 400 basis points delivered in 13 months, so the slowdown in spending is likely to be stark.
Source: Shane Oliver, AMP
