Australian housing finance beats expectations in March, investment lending surges

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Australian home loans data for March has just been released and it’s come in well above market estimates.

In seasonally adjusted terms home loans for owner occupied housing increased by 1.6% to 54,686. Loans to purchase existing dwellings rose by 2.0% to 46,105, while those for new dwellings jumped 2.9% to 2,777. Surprisingly, the number of loans for home construction fell by 1.8% to 5,804.

In dollar terms the value of loans, excluding alterations and additions, increased by 3.5%. That to owner-occupiers rose 1.6% to $AU18.71 billion, above the 1% increase expected. Excluding refinancing, lending increased by $A12.298 billion, a rise of 1.3%.

While lending to owner occupiers drifted higher, housing investment loans surged, jumping 6.4% to $AU12.913 billion. As the chart below shows, excluding refinancing, the dollar value for investment lending is currently far greater than that to owner occupiers.

Looking at the growth in lending from a year earlier, lending for housing investment jumped 20.9% while that to owner-occupiers, excluding refinancing, grew by a far more modest 3.3%.

Clearly investment lending remains hot despite the best efforts to stem its growth. APRA and the RBA will be taking note.

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