Mortgage approval data reflects two-tiered market

According to the Australian Bureau of Statistics housing finance figures, released Friday, the total number of owner-occupied home loans approved on a seasonally adjusted basis increased by 2.9 per cent in August. The value of owner-occupied home loans increased by 6.1 per cent over the same period. 

The value of investor housing finance approvals fell by 0.4 per cent over the month, following a 0.5 per cent increase in July, a 0.7 per cent drop in June and a 3.2 per cent fall in May.

The August data reflected continued easing in housing investor lending growth, which has shown little growth for the past three months now, according to ANZ Research.

“This suggests that investor lending adjustments in response to APRA’s macro prudential measures are having the desired effect, and taking some of the heat out of the housing market in recent months,” the group said in a statement.

“The easing in new investor lending is clearly reflecting the cumulative impact of tighter lending conditions and higher interest rates being faced by the sector.

“APRA will be satisfied that their measures are indeed working, and their desire to see investor credit ease below 10 per cent should see further soft growth over the coming months.”

The Housing Industry Association noted that new home lending to owner-occupiers is below a cyclical high reached in mid-2014.

“However, more recent levels of monthly lending activity have remained healthy and this was also the case for August 2015,” HIA economist, Diwa Hopkins said.

“Lending to investors seeking to construct housing fell away sharply during the month, following the all-time high reached in July."

Investors have played a key role in the current new homebuilding cycle, which has been a vital element of the broader economy as investment into other sectors continues to ebb, she said, adding that regulators and lenders alike must be cognisant of this in the context of the APRA interventions in the residential lending environment.