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Investor lending continues to fall

The value of new investor loan commitments has dropped for the fourth month in a row, new data has shown.

The Australian Bureau of Statistics (ABS) has released its Lending Indicators report for March 2020, outlining how many loans were written in the month before the coronavirus pandemic started in earnest in Australia.

According to the data, the value of new loan commitments for investors fell by 2.5 per cent in a month (in seasonally adjusted terms), dropping from $5.2 billion in February 2020 to $5.1 billion in March 2020.

The figures show that the value of investor loans dropped for the fourth month in a row, representing the lowest total value since September 2019 (when loans totalled $5.0 billion).

However, the stats mark a 5.2 per cent rise on the same period last year, when $4.8 billion of investor loans were written (on a seasonally adjusted basis).


Number of investor loans written on the rise

While the value of investor loans fell in March, the number of loans written for investor purposes (excluding refinancing) actually rose for the first time this calendar year.

The ABS stats show that there were 11,230 investor loans written in March, up from January and February when just over 10,000 loans were written.

Indeed, more investor loans were written for construction, buying newly erected dwellings, purchasing residential land and for refinancing than in February.

The only investor segment to see a reduced volume of loans written was for alternations, additions or repairs.


State-by-state analysis

NSW investors led the way, with nearly a third of all investor loans being written (3,696) for borrowers in this state. This was closely followed by Victoria (3,316 loans) and Queensland (2,219). 

The Northern Territory was the only region to experience a drop in the number of investor loans written, with just 38 investor loans written in March 2020.

NSW also reported the highest value of investor loans written, totalling $2.1 billion (in seasonally adjusted terms), followed by Victoria ($1.6 billion). However, as the national figures show, the value of investor loans dropped in most states. 

South Australia was the only state to report an uptick in the value of investor loans. In March 2020, $229 million of investor loans were written in SA, up from $202 million in February.

While the value of investor loans has been falling, first home buyer loans reached a decade high in March 2020, with $4.2 billion of finance written for new owner-occupier first home buyer loans.

The lending data also showed that personal finance fixed-term loan commitments fell by 8.2 per cent in March.

[Related: FHB loans reach new heights in March]

Investor lending continues to fall

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Annie Kane

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. 

Contact Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.

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