Australian housing investment lending pulls back for the third month, but still close to record levels

The RBA and APRA will be very pleased with the release of home loan data this morning which showed that the absolute size of investment loans, and the percentage that loans for investment made of total lending fell – for the third month in a row.

That’s in the context of the overall 1% fall in the value of home loan lending and 1.2% increase in the number of new loans.

Looking at investors specifically, February data from the ABS out today shows investment housing loans fell 3.4% during the month to $12.05 billion from $12.47 billion in January and an all-time high of $12.50 billion in December last year.

In percentage terms the ratio of investment lending to total lending, at 39.65%, slipped back below 40% for the first time since June 2014.

That’s what the regulators want to see and what the RBA meant when the Governor said in Tuesday’s statement on interest rates that “the Bank is working with other regulators to assess and contain risks that may arise from the housing market.”

But to put some context around the figure of $12.05 billion for investments, it’s still the highest level at any time except for the last 5 months and around 43% higher than the investor average of the past 5 years of just $843 million.

So it’s positive news for financial stability and proof that APRA and the RBA are winning the war.

It also means that if the RBA believes that the trend has turned housing shouldn’t be an impediment to another rate cut.

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