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Investor lending bounces back in October

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Staff reporter 5 minute read

ANZ noted that investor lending has experienced a “sawtooth” pattern in recent months as commitments rebounded by 1.6 per cent in October.

The latest figures from the ABS show that housing finance, excluding refinancing, was up modestly in October, though the annual rate of growth is still slowing.

“Within the total, investor financing was up 1.6 per cent and appears to be stabilising, though it has experienced somewhat of a sawtooth pattern in recent months, so this conclusion may be premature,” ANZ said.

“The value of housing finance commitments rose slightly in October, although not by enough to offset the previous month’s sharp decline.

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“Annual growth in finance commitments has now fallen to just 2.4 per cent — the weakest growth rate in over a year. This is in line with the broad cool down we are seeing across the housing market; with price inflation, auction results and credit growth all slowing.”

The ABS data shows that 55,406 home loans were approved throughout October – down slightly from the 55,746 loans written in the month prior.

“This is the fourth consecutive month where we have seen more than 55,000 home loans approved. The last time more than 55,000 home loans were approved each month for this long was back in June 2016,” Mortgage Choice chief executive officer John Flavell said.

“This data makes it clear that the property market is alive and well, driven by record low rates."

Looking ahead, Mr Flavell said while he would expect to see a seasonal slowdown in home loan demand over the coming months, on the whole, home loan demand should remain relatively robust.

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“While some Australians do tend to put their purchasing plans on the backburner until after the new year, I think the low rate environment will continue to ensure there is still plenty of home buying activity in the run down to the end of the year,” he said.

“At its latest board meeting the Reserve Bank of Australia once again decided to leave the official cash rate on hold.

“This is the 16th consecutive month that interest rates have been left on hold. And, as we head into the new year, it is widely expected that interest rates will continue to remain lower for longer, which should help to keep some heat in the property market.”

Throughout the month of October, $32.5 billion in home loans were approved – up 0.6 per cent on September.

“Interestingly, the value of all investment loans written jumped 1.6 per cent over the course of the month, with almost $12 billion in investment loans written,” Mr Flavell said.

“Despite the myriad of changes we have seen in the investment lending space over the last 12 months, investors remain active in the Australian property market.

“Looking forward, with interest rates continuing to sit at historical lows, I think we can expect to see continued strong demand from investors. Of course, that said, it is important to note that this level of demand will be slightly less than what we have seen in recent years.

“Today, investors account for approximately 36 per cent of all loans written – down from 40 per cent since the start of the year.”

[Related: Investors switched $1.2bn of loans to owner-occupier]

Investor lending bounces back in October
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James Mitchell

James Mitchell

James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.

He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.

James holds a BA (Hons) in English Literature and an MA in Journalism.

 

 

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