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Sluggish investor activity driving home loan slump

Home loan demand has dropped for the fifth consecutive month, driven by a continual fall in investor lending activity, new ABS data has revealed.

According to the latest Housing Finance and Lending Finance data from the Australian Bureau of Statistics (ABS), the total value of dwelling commitments fell by 0.2 of a percentage point in April ($148 million), in seasonally adjusted terms, slipping from $31.89 billion in March to $31.74 billion.

The drop in the total value of housing commitments was spurred on by a 0.9 of a percentage point decrease in the value of fixed rate investor lending commitments, which fell from $10.88 billion in March to $10.75 billion.

However, the overall decline in home loan activity was partially offset by a 0.2 of a percentage point rise in the total value of owner-occupied housing commitments in April.

Further, the total number of owner-occupied dwelling commitments fell by 1.4 per cent in April, dropping by $910 million, from $53.01 billion in March to $52.116 billion.


The fall was largely driven by a 3.7 per cent drop in purchases of new dwellings, with purchases of established dwellings and construction of dwellings also falling by 1.3 per cent and 0.2 of a percentage point, respectively.

However, the decline was moderate when compared with the sharp 4.4 per cent month-on-month fall in total dwelling commitments reported in March.

When analysed on a state-by-state basis, Victoria experienced the sharpest decline (3.5 per cent), followed by Tasmania (2.7 per cent), Queensland and Western Australia (1.5 per cent), the ACT (1.5 per cent) and NSW (0.8 of a percentage point).

The Northern Territory and South Australia were the only states to report a rise in the number of housing commitments, with increases of 6.3 per cent and 4.4 per cent, respectively.

The share of housing commitments from first home buyers rose in April, increasing by 2 basis points from 17.4 per cent to 17.6 per cent. The average loan size for first home buyers also increased, rising by $7,200 to $342,800.

The average loan size for all owner-occupied housing commitments grew by $10,200 to $398,500 over the same period.

According to RateCity spokesperson Sally Tindall, the continued fall in housing commitments is a reflection of the tighter underwriting standards imposed by the Australian Prudential Regulation Authority (APRA) and the increased scrutiny of loan applications off the back of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. 

“APRA has been very clever in motivating the banks to improve their serviceability policies,” Ms Tindall said.

“Findings from the royal commission have also had a major impact on loan application processes, with increased scrutiny on paperwork at every step in the process.

“If you’re looking for a home loan, it’s now vitally important to get all your ducks in a row before applying.”

Moreover, the ABS’ Lending Finance data revealed that personal finance approvals rose by 2.0 per cent in April to $6.28 billion.

Commercial finance approvals also increased, jumping by 1.1 per cent to $41.45 billion over the same period.

Lease finance approvals also increased, up by 2.1 per cent to $539 million.

[Related: ANZ surprised by prolonged housing weakness]

Sluggish investor activity driving home loan slump
Home loan, arrow down, investor

Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

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