Fewer loans are being issued to investors

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Jul 12, 2017

Fewer loans are being issued to investors

New data from the ABS confirms that investor lending is on a downward trend.

Malcolm Gunning, president of the REIA.

May housing finance data released yesterday by the Australian Bureau of Statistics confirms that finance approvals for investor housing are on a downward trend, says the Real Estate Institute of Australia.

“The value of investment housing commitments decreased by 1.5 per cent in May in trend terms. This follows a fall in the previous month and is well down from its 2015 peak”, said REIA president, Malcolm Gunning.

The May data is the first to show APRA's call for slower rates of growth in lending to investors, and the banks' lifting of interest rates for interest-only loans.

“To put this in perspective it needs to be remembered that the May figures are the first to show the impact of the actions by the regulators and banks to limit bank lending to dampen investor demand for property," said Gunning.

“Overall the figures for May 2017 show, in trend terms that the number of owner-occupied finance commitments decreased by 0.4 per cent. If refinancing is excluded, in trend terms, the number of owner-occupied finance commitments increased by 0.1 per cent and is the ninth consecutive month of increases.

The proportion of first-home buyers at 14 per cent was the highest since July 2015.

“The proportion of first homebuyers, as part of the total owner-occupied housing finance commitments, increased to 14 per cent and is the highest since July 2015. The number of first homebuyer commitments increased by 28.9 per cent for the month and is the highest since October 2014," said Gunning.

New incentives for first-home buyers are likely to have an impact on the data when the ABS's July figures come in.

“The May figures show that the market is adjusting with owner occupiers and first home buyers returning to the market as investor activity decreases and is worth noting that this is before the recent concessions introduced for first homebuyers,” concluded Gunning.