Investor Home Loans Hit Lowest Level in 9 Years
By Matthew Cranston – Financial Review
Updated 17 Jan 2019
The share of investors in Australia’s home loan market has dropped to its lowest level since October 2009, as the supply of housing in major cities starts to re balance at a time where banks have tightened lending requirements in the wake of the royal commission.
Investor mortgage lending fell 4.5 per cent in November, sending the total to $9.3 billion from $9.9 billion in October, official figures on Thursday showed. Investor lending is now down 22.6 per cent on the same time last year.
Total housing finance fell 2.5 per cent for the month to $29.1 billion in seasonally adjusted terms, much worse than the consensus of economists’ expectations – with an average 1.2 per cent drop having been forecast.
Owner-occupier lending didn’t improve, down 1.4 per cent for the month.
But the focus is clearly on the investor lending segment, which makes up only 32 per cent of total lending in seasonally adjusted terms – the worst figure since October 2009 when it dipped below 32 per cent.
With house prices having fallen 4.8 per cent across the country, the weakest conditions in a decade, and the biggest market of Sydney down 8.9 per cent in the past 12 months, banks have become more concerned about loan-to-value ratios and refinancing.
Four in 10 loans rejected
An analysis by Digital Finance Analytics reveals that about four in 10 mortgages were rejected in December and that mortgage brokers, who act as an intermediary between lenders and banks, are claiming concerns about the findings of the Hayne royal commission are adding to the nervousness.
However, Nab chief economist Ivan Colhoun said that if it was just banks tightening up on lending then the fall in investor borrowing would have been noticed in cities outside of Sydney and Melbourne.