CBA: Impact Of APRA's Initial Move Weill Be Modest

In the wake of today's move from the APRA, CBA note that "to be clear, the policy change today will result in some future applicants borrowing less money than they would have otherwise. But our initial assessment is that current momentum in the housing market is sufficiently strong that the overall impact on dwelling price growth next year will be modest."

• "We expect national dwelling prices to rise by 7.0% in 2022 on the proviso that there are no further policy changes from APRA with regards to home lending. Additional changes cannot be ruled out. Indeed, APRA in conjunction with other members of the Council have today indicated that they will, "continue to closely monitor risks in residential mortgage lending, and can take further steps if necessary." If it turns out to be the case that the housing market is still causing the Council discomfort in 2022 the most likely policy response would be to further increase the minimum interest rate buffer. At this stage we consider that unlikely, particularly given we expect fixed mortgage rates to drift higher over 2022."