FHB Loans Continue To Rise

Posted on 24/01/2019  
FHB Loans Continue To Rise

The housing downturn in the two biggest cities, plus government incentives, are creating new opportunities for first-home buyers. New ABS data shows that the market share of first-home buyers is now at its highest level in seven years.

The value of new housing loans dropped 2.5% in Nov­ember and was 16% below the level of a year ago, which was close to the market peak.

The ABS report shows the value of lending to investors nationally dropped 4.5% to $9.3 billion, the lowest level in six years and down almost 30% from the peak reached in early 2017. But in some states investors loans are still rising, notably in Queensland and South Australia.

Owner-occupiers up­grading their homes arranged $10.1 billion in mortgage commitments in November, down 3.1% from the previous month and 17% below the peak in the middle of last year.

The fall in the Sydney and Melbourne markets, together with state government tax breaks, is encouraging a lift in purchases from first-home buyers, whose share of housing finance has risen to 18.3%, the highest level since 2012.

National Australia Bank economist Kaixin Owyong says the downturn in mortgage approvals for both owner-occupiers and investors is concentrated in NSW and Victoria, consistent with lower turnover and lower house prices in those states.

Investor approvals are rising in South Australia and in Queensland. There are also signs the owner-occupier market in Western Australia is beginning to recover.

Lending for construction of new homes is down everywhere except Tasmania. Nationally, loans for new housing dropped 2% in November, and were 9% below a year earlier.

Housing Industry Association chief economist Tim Reardon says this reflects the credit squeeze which began in 2017 when APRA imposed restrictions on interest-only lending and has intensified as banks become more cautious.

However, APRA eased some of its lending restrictions from 1 January and has urged banks to loosen some of its criteria to free up the home finance system.

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