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Market Watch: Total home loan approvals down

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Total home loan approvals down in latest figures
Newly released figures show that mortgage approvals for November 2014 were down against the previous month, despite predictions for an increase. Australian Bureau of Statistics data reveals that total home loan approvals fell by 0.7 per cent from October; a 1.7 per cent increase had been expected. Approvals of loans to investors dropped 2.2 per cent after a revised 0.5 per cent gain in October. It was the biggest loss since January and snaps a 5-month run of increases. Owner-occupier loans fell by 0.2 per cent in November following a 1 per cent rise the month before. The Australian Prudential Regulation Authority has been keen to curb the growth in property being bought by investors due to its effect on the housing market.  
 
Increase in mortgage approvals for first home buyers
While the overall figure for home loans may be down there is better news for first home buyers. Commitments for those beginning their climb up the property ladder increased as a percentage of total owner-occupier loan approvals to 11.6 pent in November, up 0.2 per cent from October. The average loan size for first home buyers rose $2,600 to $317,600.
 
Property investors play the long game
Australian property investors are having to accept lower rental yields but are playing the long game with hope of capital gains from their portfolio. The Sydney Morning Herald reports that more than a million investors forego current income, and in many cases cover a shortfall between loans and income, in anticipation of greater returns later on. The ARPA and the Reserve Bank of Australia are keen to reduce the exposure that investors have to the property market and vice versa and figures from the Australian Taxation Office highlight the risk; in 2012 property investors filed $13.8 billion of losses with around two-thirds of landlords posting losses.

 

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