Home loan approvals continue slipping

Total home loan approvals were down by 13.6 per cent year-on-year, driven by a 20.5 per cent slide in investor lending and a 7.9 per cent decline in owner-occupied home loan approvals.  

ANZ senior economist Daniel Gradwell observed that “ongoing credit tightening and out-of-cycle mortgage rate increases are still weighing on the market”, but he noted that he was not surprised by the figures, pointing to the results of the latest ANZ/Property Council survey.

The research, which involved a survey of 1,000 property industry professionals, revealed that sentiment regarding debt finance availability in the December quarter (Q4) slipped deeper into negative territory, with the ANZ/Property Council index falling from -18 to -24.

“The Q4 ANZ/Property Council survey showed that firms expect credit availability to worsen further from here,” Mr Gradwell continued.

“We [ANZ] think this is indicative of tightening credit standards, meaning that housing finance will remain weak.”

The ABS data also revealed that the value of home approvals also dropped, falling by 2.1 per cent, with the value of owner-occupied mortgages slipping by 2.7 per cent, and the value of investor home loans dropping by 1.1 per cent.

Mr Gradwell stated that the total value of home loan approvals is 14 per cent lower year-on-year, which he said was the weakest result since 2010.  

The ABS also reported a 3.8 per cent drop in approvals from first home buyers (FHBs) within the owner-occupied segment.

“This means that in annual terms, borrowing is flat from a year ago. But keep in mind that first home buyer activity is still at the highest levels in a number of years,” Mr Gradwell added.

“This was supported initially by the introduction of stamp duty discounts in New South Wales and Victoria, and more recently the fall in prices has improved affordability somewhat, although it is clearly still difficult.”

[Related: Borrowers still opting for variable rates despite hikes]