Data Snapshot – Tuesday, 17 January 2017
Tuesday, 17 January 2017
Housing Finance
Investors Still in the Game
•
The number of loans extended to owner occupiers rose 0.9% in November, more than offsetting
a 0.6% decline in the previous month. Despite the increase, the annual rate remained in decline
at -2.6%, the weakest in two years.
•
Softer growth in owner occupier lending has been offset by a pickup in investor lending. The
value of housing loans for investors jumped 4.9% in November, and has grown in 9 out of the
last 12 months. On an annual basis, the value of investor loans was 21.4% higher on a year ago.
As a proportion of all loans, investor lending lifted to 40.0%. This was the highest since July
2015, but still down from its peak of 44.9% when the RBA and APRA voiced their concerns over
the strength of investor home lending growth.
•
The value of both investor and owner occupier loans rose 2.2% in November, which saw annual
growth pick up from 2.1% in October to 4.2% in November. This suggests that home loans
overall picked up over the final months of 2016.
•
The pickup in housing demand is consistent with the ongoing moderate growth in house prices
and high auction clearance rates. While fixed rates have edged higher in recent months, interest
rates remain close to historical lows and will continue to further support the housing market
and prices.
Number of Housing Loans
Aust. Housing Finance
(to Owner Occupiers, in thousands)
(By value, $ billions)
70
40
60
30
Total
Owner Occupier
50
20
40
10
Investor
30
Jan-03
Jan-06
Jan-09
Jan-12
Jan-15
Jan-18
0
Jan-03
Jan-06
Jan-09
Jan-12
Jan-15
Jan-18
Owner Occupier Home Loans by Number
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Data Snapshot – Tuesday, 17 January 2017
The number of loans extended to owner occupiers rose 0.9% in November, more than offsetting a
0.6% decline in the previous month. Despite the increase, the annual rate remained in decline at
-2.6%, the weakest in two years.
The gain in the month was entirely driven by new loans extended. For November, the construction
of dwellings (2.3%), purchase of new dwellings (3.3%) and the purchase of established dwellings
(0.6%) all rose in the month. Meanwhile, refinancing fell 1.2% in November. When excluding
refinancing, loans rose 2.1% in November, and have lifted for three consecutive months. On an
annual basis, owner occupier loans excluding refinancing contracted 2.0% in the year to
November.
By State
The Eastern States all saw owner occupier loans increase in November, including NSW (1.5%),
Victoria (0.8%) and Queensland (2.4%). Loans in the ACT edged up 0.2% in November. Owner
occupier loans contracted in South Australia (-1.3%), Western Australia (-0.7%) and Tasmania
(-1.0%).
On an annual basis, owner occupier loans remained in contraction in NSW (-6.7%) and Victoria
(-2.0%), although both States have been witnessing relatively buoyant growth in the value of
investor lending (see below for more details). Western Australia also saw owner occupier loans
contract over the year (-9.2%), as did the Northern Territory (-28.4%) and the ACT (-8.8%). The
States to witness gains over the year were in Queensland (7.4%), Tasmania (9.8%) and South
Australia (0.8%).
Housing Finance by Value
Softer growth in owner occupier lending has been offset by a pickup in investor lending. The value
of housing loans for investors jumped 4.9% in November, and has grown in 9 out of the last 12
months. On an annual basis, the value of investor loans was 21.4% higher on a year ago. As a
proportion of all loans, investor lending lifted to 40.0%. This was the highest since July 2015, but
still down from its peak of 44.9% in May 2015 when the RBA and APRA voiced their concerns over
the strength of investor home lending growth.
The RBA will be watchful of these developments in investor demand, but it is unlikely to be too
perturbed given that lending standards have since strengthened and financial conditions have
tightened due to the recent rise in global government bond yields.
The value of both investor and owner occupier loans rose 2.2% in November, which saw annual
growth pick up from 2.1% in October to 4.2% in November.
Fixed Home Loans
The proportion of borrowers fixing their loans edged down from 12.8% in October to 12.5% in
November, following a rise in fixed rates over the final months of 2016. The lift in fixed rates is in
step with a surge in global government bond yields following the election of Trump to the US
presidency. Australian 3-year swap rates have trended higher since September of last year
although yields have retreated at the turn of the year.
First-Home Buyers
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Data Snapshot – Tuesday, 17 January 2017
As a proportion of total loans, first home buyer loans edged up from 13.7% in October to 13.8% in
November, the highest in 16 months, although the proportion of first home buyers remains low by
historical standards.
First Home Buyers
Fixed Rate Home Loans
(% of all dwellings financed)
(% of all dwellings financed)
35
30
25
20
15
10
5
Jan-02
Jan-05
Jan-08
Jan-11
Jan-14
Jan-17
0
Jan-02
Jan-05
Jan-08
Jan-11
Jan-14
Jan-17
Outlook and Implications
Owner occupier lending has moderated of late, but this weakness has been made up by a recent
surge in investor lending. Overall, housing demand appears to have strengthened in recent
months and is consistent with the ongoing moderate growth in house prices and high auction
clearance rates.
While fixed rates have edged higher in recent months, interest rates remain close to historical
lows and will continue to further support the housing market and prices.
Janu Chan, Senior Economist
Ph: 02-8253-0898
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Data Snapshot – Tuesday, 17 January 2017
Contact Listing
Chief Economist
Senior Economist
Senior Economist
Besa Deda
[email protected]
(02) 8254 3251
Josephine Horton
[email protected]
(02) 8253 6696
Janu Chan
[email protected]
(02) 8253 0898
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