Auction clearance rates have been weak this year, but the value of home loans rose more than expected in February. (ABC News: Stephen Letts)
Easing house prices have supported a renewed interest in home loans for both owner-occupiers and investors in February.
In seasonally adjusted figures from the Australian Bureau of Statistics, the value of owner occupier loans rose by 1.3 per cent, while investor loans were up 0.5 per cent over the month.
Both results were ahead of market expectations.
ANZ’s Daniel Gradwell said, while sectors differed, the overall picture was one of home loans stabilising.
“The increasing presence of first home buyers is driving strength in the owner-occupier segment, while investor borrowing appears to have finished its earlier decline,” Mr Gradwell said.
“First home buyer lending is up more than 40 per cent over the past year, and accounted for 12.4 per cent of all housing finance in February, the highest share of borrowing in nearly five years.
“From the perspective of getting first home buyers into the market, the NSW and Victorian state governments’ stamp duty incentives are working a charm,” Mr Gradwell said.
Investor lending down 11pc on last year
JP Morgan’s Henry St John was more circumspect, pointing out while the value of loans held up, the number of loans issued to owner-occupiers fell.
Mr St John said investor lending had been weak for some time, but the decline in owner-occupier housing finance was a more recent development.
“In annual terms, owner-occupier housing finance volumes are down 0.8 per cent over the year, a meaningful deceleration from the 2016 high of 12.2 per cent [over the year]”, Mr St John said.
“[This] likely reflects both declining demand for new loans from households, as well as the imposition of stricter lending practices, particularly through the banking royal commission period.”
While investor lending was up over the month, in terms of value it is down more than 11 per cent over the year.
“Through the cycle, investor lending has tended to be fairly responsive to trends in property price growth, and declining returns in the two major investment markets of Sydney and Melbourne is working to lower the expected rate of return for these buyer types, lowering their demand for new financing,” Mr St John said.