Changes still evident as investor, owner occupier loans fall in value

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Changes in Australia’s lending market are continuing to be felt, with figures from the Australian Bureau of Statistic revealing a fall in loans to both investors and owner occupiers over the month of January.

Released yesterday, the figures show the value of investor loans fell 1.6% to $11.36 billion in January, while the value of owner occupier loans fell 4.3% to $31.89 billion.

The value of investment loans over January is now well below the $14 billion peak seen in April 2015 and is a significant 14.8% lower than January 2015.

Over the same 12-month period, the value of loans to owner occupiers has increased by 15.9%.

Housing Industry Association economist Geordan Murray said the fall in value of investment loans was driven by a decline in investors financing the purchase of existing dwellings.

“Investor lending continued to ease back after the strong growth in that part of the market over the last few years. The decline in the total value of lending to investors was driven by a fall in lending to those purchasing established dwellings,” Murray said.

“In the three months to January lending in this part of the market was down by around 13% compared with a year earlier. On a more positive note, lending to investors purchasing new dwellings was 5.5% higher over the year,” he said.

Savanth Sebastian, economist with the Commonwealth Bank, said the fall in investor lending had likely been prompted by a number of factors and could indicate that property has lost some of the shine that made it a popular investment target in recent years.

“The run up in house prices, tighter home lending criteria by the banking sector and recent consolidation in the housing sector are prompting more households to focus on alternative asset classes to property,” Sebastian said.
 

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