Australian home loans hit an eye-watering $33.4 billion in December

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After months of strong growth, the value of lending to Australian housing investors fell in December, albeit not by much.

According to housing finance figures released by the ABS on Friday, the value of lending to investors fell by 1% to $13.199 billion, the first monthly decline since August.

However, the figure was still up 20% on the levels of a year earlier.

In its February monetary policy statement, the RBA said that housing finance had “picked up a little” with “stronger demand by investors”.

“With leverage increasing, supervisory measures have strengthened lending standards and some lenders are taking a more cautious attitude to lending in certain segments,” it said.

The decline perhaps reflects that “caution” from some lenders, although further data will be required to see whether this is a one-off or start of a trend.

The pullback also coincides with reports earlier this week that the Commonwealth Bank and its subsidiary Bankwest will halt some investor lending, fueling speculation that they were approaching (or above) the 10% annual growth cap for this segment implemented by Australia’s banking regulator, APRA.

Opposing the trend seen in the second half of last year, lending to owner-occupiers actually outperformed, increasing by 1.3% to $20.207 billion.

Excluding refinancing of existing loans, new lending to owner-occupiers increased by 2.6% to $13.9 billion, leaving it up 2.3% on the levels of a year earlier.

Refinancing of owner-occupier loans fell by 1.6% to $6.295 billion, some 14.1% below the levels seen in December 2015.

Higher interest rates are clearly having an impact on refinancing levels.

Combined, the value of owner-occupier and investor finance issued in December grew by 0.4% to $33.406 billion, the highest monthly total on record. It was up 4.6% on a year earlier, marking the fastest year-on-year increase since November 2015.

By number, loans to owner-occupiers rose by 0.4% to 54,912, below the 1% increase expected.

Loans to purchase existing property increased by 0.3% to 46,375, outpaced by a 3.2% gain in loans to buy newly completed dwellings, which rose to 2,864.

Loans for the construction of new dwellings was the only area to decline, falling by 0.3% to 5,672.

In original terms, the ABS said that the proportion of owner-occupier loans issued to first home buyers came in at 103.8%, unchanged from the level seen in November.

While incredibly low from a historical perspective, it must be remembered that some first time buyers are now entering the property market as investors rather than owner-occupiers.

The ABS does not release figures on investor finance commitments as part of this report.

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