Investor lending falls in September

Thursday 25 October 2018

Mortgage lending to property investors fell to $1.01 billion last month amid ongoing tightening on interest-only credit, the latest Reserve Bank data shows.

Investor lending figures were slightly down on the same month in 2017 ($1.04 billion) and $0.5 billion short of September 2016 figures, the new figures show.

Investors borrowed less in September than May-August, according to the data. It comes as interest-only lending slumped to 30% of activity, down from highs of 41% in 2015.

Curbs on interest-only lending, influenced by Australian banking policy, have made it difficult for property investors to renew and access new interest-only credit over the course of the last year. Ongoing LVR restrictions continue to dampen the investor market.

CoreLogic senior analyst Kelvin Davidson said the subdued investor figures reflected the interest-only clampdown: “This drop in interest-only lending helps to explain the slight dip in new credit going to investors in September.”

Overall, new lending totalled $4.7 last month, up from $4.56 billion in September last year. The figure marks the sixth consecutive increase on comparable figures from 2017.

First home buyer lending hit $821 million, up from $658 million in September 2017, the data shows.

Lenders remain cautious on lending against more than 80% LVR. This represented 9.1% of lending last month.

CoreLogic’s Davison said: “Overall, today’s figures were encouraging for a market struggling to break out of its recent flat activity levels. Yet our sales projection model suggests that volumes will remain stagnant at around 80,000 p.a. into 2019. So although the official cash rate is expected to stay at 1.75% until 2020, it may still take a relaxation of the LVR policy (which is outside our model) to provide renewed impetus to property sales as we look ahead to next year.”

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