The mortgage lending market is showing no signs of cooling, data released by the Australian Bureau of Statistics shows.

The housing finance numbers released in January highlight the momentum in the investment sector and show a slight rising trend in the number of first-home buyers.

Investor lending rose 4.9% in November to $13.3 billion in seasonally adjusted terms, which was the largest monthly total since June 2015 and the sixth rise in the past seven months.


In comparison, lending to owner-occupiers, rose by just 0.4% to $19.93 billion, which was more than 10 times slower than the increase for investors. Refinancing of owner-occupier loans fell 2% to $6.44 billion, the smallest monthly total since August 2015.

Room for more investor loans

The total value of housing finance increased by 2.2% during the month and at the end of November had risen $10 billion (0.6%) from October. This brought the total of outstanding loans to $1.55 trillion for the year.

In trend terms, the number of owner-occupied housing loans fell 0.1%, while the number of loans for new dwellings rose 0.7%. The number of loans to build dwellings rose 0.2%, and the number of loans to buy established dwellings fell 0.2%.

The value of owner-occupier loans rose to 9.1% over the year to $1 trillion, three times faster than investor loans, which rose by 3.2% to $544.5 billion.

That’s well below the 10% annual growth rate imposed by the Australian Prudential Regulation Authority (APRA) in 2015 to cut the risks to the financial system of rapid housing credit growth.

Australia Outstanding Housing Loans

APRA directed banks to restrict the growth of lending to property investors and requested lenders increase the amount of capital they hold against their residential mortgage exposures to between 25% and 30%, up from about 16%.

First-home buyers still around

The number of first-home buyer loan commitments rose to 8,281 in November from 7,302 in October and the number of non-first home buyer commitments also rose. The number of first-home buyers as a percentage of total owner-occupier commitments rose to 13.8% from 13.7%.

Total commitments in trend terms accounted for $32.7 billion, of which $19.8 billion was owner-occupied loans, and $12.9 billion for investment purposes. This means 39.5% of new lending was for investment.

The ABS does not release the number of investor loan commitments in its housing finance report.


However, first-home buyers were a little more cautious about their borrowing, with the average loan size falling $3,800 to $323,900 in the month. The average loan size for all owner-occupied housing commitments rose $3,600 to $376,600 for the same period.


In essence, what the data shows is that there is still plenty of upward momentum in the housing sector, powered largely by an overheated investment sector.

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