A 4.1 per cent drop in owner-occupier lending pulled total new home loan commitments to an unexpected decline in October even as growth in investor home loans prompted economists to warn of further lending curbs.
A 1.1 per cent gain in investor lending failed to prevent the fifth straight month of contraction in new home loans by value, with the total falling 2.5 per cent from September, in contrast to economists’ expectations of a 1.5 per cent increase.
But the figures did little to dispel expectations of further macroprudential lending curbs to rein in potentially problematic loans, JPMorgan economist Jack Stinson said.
“Investor new loan commitments have increased 90 per cent over the past year and the level is now the highest since the peak in April 2015,” Mr Stinson said.
“Last cycle, outsized investor credit growth prompted [banking regulator] APRA to impose investor loan limits in December of 2014; current growth builds the case for further macroprudential tightening, even if the policy response is not targeted solely at investors.”
In north-western Victoria’s Swan Hill, the number of investors coming to open home inspections had doubled and prices had risen about 28 per cent over the past year, Ray White agent Cameron Simts said.
“We’ve got first home buyers who say ‘I’ll make an offer subject to finance, subject to building and pest inspections,’ and then we get investors who come in and offer 10 grand higher, in cash,” Mr Smits said on Thursday.
“It blows them right out of the water.”
The value of new home loan commitments to first home buyers also fell for the fifth straight month. First home buyer loans declined 4.8 per cent from September to $5.2 billion, extending a decline from May’s recent monthly high of $6.9 billion.
The latest monthly figures showed that Queensland recorded the strongest investor growth, with a 9 per cent month-on-month gain, reaching a new record high for the state at $2.1 billion.
BIS Oxford Economics economist Maree Kilroy said that even with further regulator-driven curbs next year, higher borrowing costs would be the biggest influence on borrowing.
“Recent months have seen the favourable lending environment for households begin to tighten. While the cash rate remains unchanged, fixed-rate mortgage rates have risen in the past few weeks and regulators are gearing towards further macroprudential intervention in 2022,” Ms Kilroy said.
“The impact of these changes is expected to be at the margin, however. It is not until increases in the cash rate flow through that we expect a more meaningful curtailing of credit availability. Our expectation is for the cash rate to lift gradually from Q1 2023.”
This article is from Australian Financial Review, please click the following link for the original article: https://www.afr.com/property/residential/investor-loan-growth-strengthens-case-for-more-lending-curbs-20211202-p59e4p