SYDNEY (CU)_House prices in Australia continue on an upward trend, pushing first home buyers out of the residential property market. However, investors are flocking the market, pushing growth in new mortgage lending commitments above expectations.
Rising home values have meant that the average size of loans are also increasing. Accordingly, lending to first home buyers dropped by 5 per cent to $5.4 billion in January. Nevertheless, new mortgage lending commitments during the month rose to a greater-than-expected 2.6 per cent, driven by a 6.1 per cent jump in new home loans to investors, which reached a monthly record of $11 billion. Meanwhile, overall owner-occupier new home loans hiked by 1 per cent to $22.7 billion, official figures published on Tuesday showed.
“The result was much stronger than the market and our expectations,” Stephen Wu, an economist at Commonwealth Bank, said. “New housing lending to investors drove the increase, although lending to owner‑occupiers also increased. The average loan size for both owner‑occupiers and investors continued to increase.” Despite investor loans reaching a record high in January, economists are taking a relaxed note regarding the likelihood of further macro prudential lending controls by the APRA. This is owing to the fact that investor loans make up only 32.6 per cent of total lending, still below their long-term average of 36 per cent.
“APRA flagged an apparent increase in high debt to income lending in its decision to increase the buffer in October, so continued gains in investor loan growth, the more levered portion of household borrowing, are likely being monitored closely by regulators,” JP Morgan economist Jack Stinson said. “However, investor new loan commitments remain a much lower share of total new housing commitments than when APRA introduced limits to investor lending in 2014.”
