ABS’s latest Housing Finance report found that 54,816 home loans (seasonally-adjusted) were issued for owner-occupiers in February 2017, slipping by 0.5 per cent on the preceding month in both number and value.
In seasonally-adjusted terms, owner-occupier loans were valued at $19.9 billion, while investor loans (fixed loans) dropped by 5.9 per cent, falling to $12.9 billion.
As such, the total value of dwelling finance commitments excluding alterations and additions fell 2.7 per cent.
However, in trend terms, the number of commitments for owner-occupied housing finance rose 0.3 per cent in February 2017 and the value rose by 0.2 per cent (to $20 billion).
For investors, fixed loans represented a 0.7 per cent change in value (to $13.4 billion) in trend terms.
While the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments fell to 13.3 per cent in February 2017 from 13.4 per cent in January 2017 (in original terms), the actual number of first home buyer commitments rose by 7.5 per cent to 6,596 in February from 6,136 in January.
The number of non-first home buyer commitments also rose.
Mortgage Choice CEO John Flavell commented on the drop in home loan numbers, saying: “After three consecutive months of growth in home loan approval numbers, we saw a decrease in February.
“Of course, [this] result isn’t surprising. January and December are notoriously strong months in terms of home loan demand and we then tend to see a drop off in home loan approvals come February.”
However, Mr Flavell said that while home loan approvals had seen a marginal sequential fall in February, they could still be classed as strong in overall historical trend terms.
“Moreover, the total value of all home loans written was also strong by long-term standards,” he added, highlighting that in February 2017, total mortgages were valued at $32.9 billion (in seasonally-adjusted terms) up 0.3 per cent year-on-year.
Going forward, Mr Flavell warned that recent investment policy and pricing moves by several of Australia’s main lenders could potentially see this type of home loan demand spiral down.
“Over the coming months, we expect to see lending for investment housing to decrease because a lot of Australia’s lenders are making changes in this space,” he said, highlighting that a number of lenders have tweaked their investment pricing in recent weeks.
The Mortgage Choice CEO also highlighted that some lenders, such as CUA, had vacated the investment lending space altogether, while some other key players had fine-tuned their policies.
“All of these changes will ultimately have an impact on the level of investment activity and investment loan approvals,” Mr Flavell emphasised.
[Related: ‘Hard times ahead’ for home loan borrowers]
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Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.