Australian investor home loan lending is plummeting

Australian home loan financing stalled in September with the ABS reporting a decline of 1.6% to $33.368 billion.

While the overall level of financing fell, there were stark differences between the amount lent to owner-occupiers compared to housing investors.

Lending to owner-occupiers increased by 3.0% to $21.046 billion, continuing the trend seen in August. Excluding the effects of refinancing, new lending to owner occupiers increased by 1.7%, or $235.6 million, to $14.297 billion.

Owner-occupiers refinancing of existing dwellings jumped by 5.8% to $6.75 billion.

As lending to owner-occupiers accelerated, that to housing investors continued to plummet. It slid by 8.5%, or $1.151 billion, to $12.322 billion, the smallest monthly increase since August 2014.

Fitting with the trend in total dollar financing, the number of owner-occupier loans written during the month increased by 2.0% to 55,985. Elsewhere home loans for construction, the purchase of a new dwelling and those for an existing home increased by 1.9%, 5.4% and 1.8% respectively.

While recent restrictions implemented by APRA, Australia’s banking regulator, are clearly having an effect, it is also obvious that much of that decline is being offset by renewed lending to owner-occupier buyers. Whether simply due to more demand coming from the latter, or simply the banks finding ways to change classification of some loans that were deemed to be for housing investment, there still appears to be some heat in home loan lending given it remains at historically high levels.

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