Record investor lending delivers $11bn in new home loan commitments

By Jon Bragg

March 03 2022
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High levels of investor lending drove an increase in housing lending overall last month.

New investor housing loan commitments surged 6.1 per cent in January to a new record high of $11 billion, new data from the Australian Bureau of Statistics (ABS) has revealed.

Investor activity was strongest in the ACT during the month, where the value of new loan commitments surged 22.8 per cent, while above average increases were also recorded in Victoria (11.1 per cent) and NSW (9.8 per cent).

Meanwhile, the value of investor loans in Queensland dipped 1.7 per cent but remained at historically elevated levels, according to the ABS.

“The value of new loan commitments for investor housing has grown for 15 consecutive months, consistent with the strong housing market and growth in house prices,” said ABS head of finance and wealth Katherine Keenan.

“Despite record investor loan commitments, the share of investor lending to all new housing loan commitments was around one third. This reflects the rapid growth of owner occupier commitments over the past 18 months.”

The total value of new loan commitments during the month beat market expectations, moving 2.6 per cent higher to a record $33.7 billion on the back of the strong levels of investor activity.

Owner occupier loans rose by 1.0 per cent to $22.7 billion, with the strongest activity again seen in the ACT (33.5 per cent), NSW (3.3 per cent) and Victoria (3.2 per cent).

“While investors activity has retained strong momentum, owner occupier activity, which has driven the cycle to date, looks to be nearing a peak as key segments start to turn lower,” said Westpac senior economist Matthew Hassan.

Nationally, the average loan size for owner occupiers increased by $17,000 to another record high of $619,000 with new record highs reached in nearly every state and territory.

“The strong rise in the average loan size for owner-occupier dwellings in January was due to an increase in the value of commitments, and a largely unchanged number of new loan commitments,” said Ms Keenan.

Commonwealth Bank economists Stephen Wu and Kristina Clifton said that, while the strong increase in lending came as a surprise, the housing market was still set to peak by mid-year.

“We continue to expect housing lending to cool over 2022 as the RBA begins the process of normalising the cash rate,” they said.

“Fixed lending rates have already gone up in response to market expectations for rate hikes. And monthly dwelling price growth has also slowed.”

CoreLogic reported earlier this week that house price growth in February had eased to the slowest pace since October 2020 while prices in Sydney and Melbourne were no longer rising.

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