Strong September for home lending

Thursday 24 October 2019

Mortgage lending soared in September, according to Reserve Bank data, as banks loosened serviceability tests.

Total lending jumped to $5.5 billion in September, up from $4.7 billion in September last year and $4.5 billion in September 2017, according to newly-released figures.

Investor lending stayed largely flat at $1.07 billion, up from $1.01 billion in September last year. First home buyers represented $967 million of total lending, up from $821 million in the same month last year.

Other owner-occupiers again dominated with $3.4 billion of the market, up from $2.8 billion in September 2018.

Analysts credited the lending increase to banks' relaxed serviceability rules. Australian regulator APRA abolished its minimum testing rate for banks in August, and the move is acknowledged to have had an impact here. 

CoreLogic analyst Kelvin Davidson said: "After a lull in August, mortgage lending activity rebounded strongly in September – again driven by owner-occupiers, but this time with investors also showing signs of life. The figures suggest that the easing of the interest rates used for banks’ internal serviceability tests in late August has had an immediate and significant impact."

Davidson said the strong data could impact the chances of LVR speed limits being loosened in November: "The strength in lending activity in September also starts to put a bigger question mark over the chances that the loan-to-value speed limits get loosened in November."

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