Australian home loan lending is rebounding again

A crowd of bidders at an auction. Photo: iStock

The value of Australian home loan lending rose for a second consecutive month in November, driven by an acceleration in owner-occupier and investor demand.

According to the Australian Bureau of Statistics (ABS), total lending rose by 2.3% to $33.507 billion in seasonally adjusted terms.

It was the third-highest monthly total on record, only marginally bettered by the $33.851 billion lent in August.

Lending to owner-occupiers rose by 2.7% to $21.322 billion in seasonally adjusted terms, powered by both new lending and refinancing.

Excluding refinancing, new lending rose by 2.7% to $15.16 billion, just shy of the record mark of $15.17 billion lent three months earlier.

Over the year, new owner-occupier lending increased by 11.5%.

Refinancing of owner-occupier facilities also increase by 2.7% over the month, lifting to $6.16 billion. Despite the increase, it still fell 2.8% over the year.

After bouncing 1.8% in October, lending to investors increased again, rising 1.5% to $12.185 billion in seasonally adjusted terms.

However, reflecting renewed efforts to cool investor activity in the housing market by Australia’s banking regulator, APRA, the dollar value of investor lending in November was still down 8.3% on a year earlier.

Not since June 2016 — when APRA’s initial attempts to curb investor activity through the introduction of an annual 10% cap on investor credit growth — has investor finance fallen so steeply on a year-on-year basis.

“The impact of APRA’s tighter macroprudential regulation is clearly still being felt,” said Daniel Gradwell, Economist at ANZ Bank.

Like the amount of dollars lent, the number of home loans to owner-occupiers also increased, lifting by 2.1% to 56,876 in seasonally adjusted terms.

Loans to purchase an existing dwelling rose by 2.1% to 47,452, outpaced by a 2.6% increase in those to purchase a new dwelling which tickled up to 3,214.

Mirroring recent strength in Australian building approvals data, loans to build a new dwelling rose by 2% to 6,210.

“Following last week’s bumper building approvals result, today’s data on finance approvals for the construction or purchase of new dwellings suggest that there is still room for further upside in housing construction,” says Gradwell at ANZ.

Without seasonal adjustments, the ABS said the number of first home buyer loans as a percentage of total owner occupied housing loans rose to 18.0%, up from 17.6% in October.

It was the highest proportion since October 2012.

The recent improvement likely reflects a combination of stamp duty concessions for first home buyers in New South Wales and Victoria along with fewer local and international investors participating in the market.

“The number of monthly first home buyer approvals is now up more than 60% in New South Wales, and nearly 50% in Victoria, since the state governments stamp duty discounts were introduced in July 2017,” says Gradwell.

“The policy and regulatory changes of the last 12 months are still being felt, with investors accounting for a smaller share of the market, and first home buyers increasingly able to enter the market.”

The ABS does not release data on investor housing loans as part of the housing finance report.

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