Australian home loans remain limited



  • The value of Australian home loans edged up in January, driven by investor borrowing.
  • Loans fell more than 2% from a year ago, due to a sharp drop in investor funding due to recent restrictions on interest-only loans.
  • The proportion of homeowner loans granted to first-time buyers reached its highest level since October 2012.

The value of Australian home loans edged up in January.

According to the Australian Bureau of Statistics (ABS), the value of home loans issued in January rose 0.7% to $ 33.067 billion in seasonally adjusted terms.

This is the fourth increase reported in the past five months.

Despite recent momentum, the value of housing finance fell 2.2% from the previous year, the weakest result since August 2016.


Helping to explain the annual decline, and despite a modest 1.1% increase in January, investor loans fell 12.1% from the previous year, the largest drop since June 2016.

It reflects the tighter restrictions introduced by Australia’s banking regulator, APRA, on interest-only loans in March of last year.

Partly offsetting the decline in housing finance by investors, the value of homeowner loans, excluding refinancing, rose 0.3% in January, up 6.7% from the previous year.

The annual growth of this cohort was 17.3% just six months ago.

Homeowner refinancing rose 0.9% in January, dropping 0.4% for the year.

“Housing finance appears to be stabilizing, both in terms of growth rates and types of borrowers,” said Jo Masters, senior economist at ANZ Bank.

The total value of outstanding homeowner loans issued by Australian ADIs reached $ 1.081 trillion in unadjusted terms, a new record. Outstanding loans to investors edged down after hitting a record high in December, falling to $ 561.44 billion.

Despite an increase in the value of loans issued in January, the number of homeowner loans fell 1.1% to 54,442 seasonally adjusted, below the 0.2% drop expected by economists .

In this figure, loans for new home construction rose 3.1%, partially offsetting declines in loans issued to purchase new or existing homes.


Source: ABS

First-time home loans hit a new multi-year high, reaching 18% of total homeowner loans from 17.9% in December.

This is the highest proportion since October 2012, and far from the cyclical low of 12.9% established in October 2015.

The rebound in first-time homebuyers reflects recent stamp duty concessions introduced by the state governments of New South Wales and Victoria to help improve housing affordability, as well as lower investor activity on these markets.

The ABS does not publish data on loans granted to real estate investors as part of the Housing Finance report.

Despite the weakness of real estate finance to investors over the past year, with the share of interest-only loans in total mortgages slowing rapidly and lenders having recently cut rates for fixed-rate borrowers, this suggests that investor activity could rebound in the coming months.

“Media reports in recent days point to increased competition among the big banks to capture loans to investors, which could provide some support in the coming months to the otherwise weak trajectory of this series,” Henry St said. John, economist at JP Morgan.

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