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Mortgage growth slips back into negative territory

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Reporter 5 minute read

A “lower than expected” fall in home loan approvals has been reported by the ABS for the month of March, signalling a return to the softening trend despite a rise in the previous month.

The latest Lending to Households and Businesses data from the Australian Bureau of Statistics (ABS) has reported that, in seasonally adjusted terms, the value of mortgage approvals slipped by 3.2 per cent in March. This follows on from a 2.7 per cent increase in February.

The decline was driven by a 3.4 per cent monthly drop in owner-occupied lending, while investor lending fell 2.7 per cent.

Reflecting on the data, ANZ Research analysts noted that while they were not surprised by the fall, they were surprised by the extent of the decline.


“After last month’s bounce, a fall was not surprising, although the magnitude of the loss was larger than expected,” the analysts said.

When assessed on an annual basis, the value of mortgage approvals fell by 18.4 per cent, led by a 25.9 per cent reduction in the value of investor lending and a 15.2 per cent fall in the value of owner-occupied approvals.

The ABS data has also reported a decline in the number of loans issued to first home buyers (FHB), down 0.5 per cent month-month and 10 per cent year-on-year.

The reported fall in FHB activity followed the Coalition (and Labor Party) announcement of a new First Home Loan Deposit Scheme, designed to reduce barriers to home ownership through the provision of low-deposit mortgages exempt from lenders’ mortgage insurance. 

However, Maree Kilroy, economist at BIS Oxford Economics, noted that such a policy would not stimulate FHB activity, with the new policy set to take effect from January 2020 if the Coalition is re-elected to government.


“Whilst we are starting to see some policy responses to weak first home buyer demand, such as the recently announced new First Home Loan Deposit Scheme, any proposal is unlikely to have a material effect until 2020,” she said.

Meanwhile, the ABS data reported that the value of personal finance approvals dropped 11.2 per cent in March, while the value of business lending fell 1.5 per cent.

In total, the value of lending to households and businesses declined by 2.6 per cent in March.  

[Related: REA reports revenue boost despite housing headwinds]

Mortgage growth slips back into negative territory
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