September sees increase in home loan approvals

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Exceeding analyst expectations and amidst a fall in investor lending, home loan approvals have increased for the fourth consecutive month in September.

Analysts previously expected the number of approvals to stay static, but they instead increased by 2% in the month. The result followed a 2.9% rise in August.

In September, there were 55,985 approvals, compared to August’s 55,677, according to seasonally adjusted figures published by the Australian Bureau of Statistics.

On the other hand, the value of total housing finance dropped by 1.6% in the month to $33.37 billion.

The value of owner-occupied loans rose by 3%, while approvals for investment loans fell 8.5%.

All major banks have increased their interest rates on investment loans due to mandatory requirements to increase their capital reserves.

The figures showed the largest decrease for investor loans in seven years, said Craig James, CommSec chief economist.

He also noted that regulators would be satisfied that their measures were effective in curbing demand.

"The Reserve Bank would be happy at the mix of lending in the housing market," James said.

Tom Kennedy, an economist at JP Morgan, mentioned that the central bank is sceptical of the data in a recent speech. 

"There's some other things going on behind the scenes in terms of reclassifying data from investors to owner-occupiers," Kennedy noted.

RBC Capital Markets fixed income and currency strategist Michael Turner stated that figures from the banks have been adjusted to display a much higher level of unsettled investor credit.

"And borrowers now have an incentive to report loans as owner occupier given the relative increase in rates charged for investor lending," Turner added.



 

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