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Sunday 22

July, 201812:38 PM



Investors retreat from housing market

Investors retreat from housing market

Home loan approvals fell in March, led by sharp drops in lending to investors, latest Australian Bureau of Statistics figures show.

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By AAP 11.05.2018 11:39 AM

Housing finance commitments fell sharply across Australia last month with lending to investors hitting fresh lows and driving declines around the country.

Coming off a six month high in February, the value of total housing finance fell 4.4 per cent to $31.89 billion in March, seasonally adjusted data from the Australian Bureau of Statistics shows.

Loans to investors dropped sharply, down nine per cent month-on-month.

ANZ senior economist Daniel Gradwell said investors made up just 42 per cent of lending nationwide, their lowest share since 2012.

"While this result predates APRA's recent decision to remove the 10 per cent 'speed limit' on investor borrowing, it is hard to see a re-acceleration in the investor segment with sentiment clearly subdued," Mr Gradwell said.

JP Morgan analyst Henry St John said tighter regulations had sharply adjusted the new lending market, with investors' share of new lending in dollar terms also at six-year lows.

Mr St John said higher loan-to-income lending standards recently announced by APRA, and potential new requirements resulting from the banking royal commission could drive further falls in investor lending throughout 2018.

"The significantly larger proportion of investor activity that occurs at high loan-to-income ratios implies that as lending criteria continue to be tightened, this will be a meaningful headwind for lending and credit growth," Mr St John said in a note on Friday.

The number of home loan approvals for owner occupiers fell 2.2 per cent for the month, disappointing market forecasts of a 1.5 per cent decline.

The national value of new home loan approvals for owner-occupiers was down 1.9 per cent, to $20.1 billion.

New lending to owner-occupiers fell across all major states outside Tasmania, which rose 1.9 per cent and the ACT which gained 2.6 per cent.

In seasonally adjusted data from the ABS, South Australia led declines, down 8.6 per cent, NSW down 2.9 per cent, and Victoria down 1.5 per cent.

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