Mortgage approvals hit 6 month low
Australian home loan approvals fell in July, according to Australian Bureau of Statistics (ABS) figures, as buyers stood on the sidelines amid a prolonged election vote-count.
While total approvals were down, the data also showed signs of investors returning to the market after a regulatory-driven slowdown.
Approvals fell 4.2% from June, the biggest monthly decline since January and worse than economists’ 1.5% estimate.
The value of loans to investors rose 0.5% from the previous month. Loans to owner-occupiers fell 3.1% from June, also the biggest fall since January.
The Reserve Bank of Australia has been gaining confidence that regulators’ curbs on investment lending are reducing risk and preventing imbalances building up, allowing it to lower interest rates without rekindling a boom in property values.
Even so, outgoing Governor Glenn Stevens conceded in an Australian Financial Review interview Friday that he had “discomfort” about Sydney house prices, which have risen 61% in the past five years.
“While the value of housing finance commitments fell in July, this was entirely driven by owner-occupiers as investor finance continued to rise,” ANZ economist Daniel Gradwell said.
“This is the third month in a row where investor borrowing diverged from owner-occupier lending, suggesting to us that investors are driving the recent pickup in housing demand,” Gradwell said.
NAB economist Tapas Strickland said the ABS figures hold good news for the Australian property market.
“Today’s report has few implications for monetary policy. At the margin it adds to the evidence that risks in the housing market have abated,” Strickland said.
Investment lending rose to 47.6% of total loans in July, the largest portion since July 2015.
By state, the biggest fall in home-loan approvals was 6.5% in the Northern Territory; largest increase was 1.4% in Tasmania. The total value of dwelling finance commitments excluding alterations and additions fell 1.8%.