Lending to first home buyers in Australia just fell its the lowest level in more than a decade

The value of housing loans to Australian investors rebounded strongly in May, although it remains well below the levels of recent years.

According to latest housing finance data, released by the Australian Bureau of Statistics on Monday, the value of lending to investors jumped by 3.9% to $11.745 billion following seasonal adjustments, helping to offset a 0.6% decline in lending to owner-occupiers which fell to $20.526 billion.

Excluding refinancing which fell 2.5% to $7.005 billion, the value of owner-occupier lending rose by 0.4% to $13.52 billion.

In absolute terms, the value of housing finance rose by 1.0% to $32.271 billion.

Compared to May 2015, the value of owner-occupier lending, excluding refinancing, rose by 15%, slightly shaded by owner-occupier refinancing, which grew by 16.3%.

Despite the surge in investor lending registered in May, the value of lending to housing investors slumped by 13.3% over the same period.

The chart below tracks the annual percentage change in the value of home loans written by category.

And here’s the same chart, only in dollar terms.

While in dollar terms the value of lending remains elevated, momentum has clearly waned in recent months, whether measured in percentage terms or in the value of loans extended.

Indeed, at 3.0%, the annual increase in total housing finance now sits well below the 25%-plus levels seen in late 2013.

Mirroring the decline in lending to owner-occupiers, the number of home loans to owner-occupiers fell by 1% to 56,648. Loans to purchase an established dwelling fell 0.9% to 48,429, outpaced by a 2.7% drop in loans to construct a new dwelling.

Those declines were partially offset by a 0.4% increase in the number of loans to purchase a new dwelling, which rose to 2,615.

The ABS does not release figures for investor lending as part of housing finance release.

Without seasonal adjustments, the percentage of owner-occupier loans to first home buyers slid to 13.9%, down from 14.4% in April. Not since April 2004 has the percentage of owner-occupier loans to first home buyers been this low.

The ABS stresses that first home buyers are defined as people entering the home ownership market as owner-occupiers for the first time, with first-time investors excluded from the data.

In other words, first-time buyers purchasing as an investment, rather than to occupy, are not captured in the data.

This, along with other factors such as housing affordability, elevated youth unemployment and a preference to rent in more desirable areas may explain the continued decline in lending to first home buyers.

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