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Investors continue their comeback, as owner-occupiers retreat

Investors continue their comeback, as owner-occupiers retreat

The value of new home lending has fallen for the third consecutive month, according to today’s ABS lending indicator data.

A total of $29.57 billion in new mortgages were settled in the month of October, down 2.5 per cent from September, in seasonally-adjusted terms. 

Owner-occupier lending fell by $852 million in the month, down 4.1 per cent from September.

Investor lending continued to climb to $9.73 billion, up $109 million, or 1.1 per cent, month-on-month – the highest level since April 2015.

However, as a proportion of all new loans, investors still only make up 33 per cent, as compared to April 2015 when it was 46 per cent.

Value of new home loans approved in October

AmountMonthly changeYear-on-year change
TOTAL

$29.57 billion

-$743 million

$7.20 billion

-2.5%

32.2%

Owner-occupier

$19.84 billion 

-$852 million

$2.61 billion

-4.1%

15.1%

Investor

$9.73 billion 

$109 million

$4.60 billion

Highest since April 2015 

1.1%

89.6%

Source: ABS Lending Indicators October 2021, released 2 December 2021, seasonally adjusted data. Annual change is Oct 2020 to Oct 2021.

RateCity.com.au research director, Sally Tindall, said investor lending might be on the rise, but was unlikely to be enough, on its own, to prompt APRA to take further action.

“While the value of investor lending is nearing an all-time high, as a proportion of all new loans it’s still a way off from smashing any records,” she said.

“Back in the 2015 peak, investor lending made up 46 per cent of all new loans, today it makes up 33 per cent which is below the historical average.

“The recent surge in housing stock and the changing sentiment on the back of rising fixed rates could be enough to cool the property market without any further intervention from the government regulators,” she said.

First home buyers continue to drop

For the ninth month in a row, the number of owner-occupier first home buyer loans fell nationally, down 3.8 per cent in the month, and 29.9 per cent since the peak in January 2021.

Almost all states and territories saw a drop in the number of first home buyers in October, with the exception of Victoria – which was coming off a large drop in September – and the Northern Territory.

Owner-occupier first home buyers in October

AmountMonthly changeChange since peak
(Jan 2021)
Value of loans 

$5.19 billion

-$260 million

-$1.88 billion

-4.8%

-26.6%

Number of loans

11,402

-446

-4,855

-3.8%

-29.9%

Source: ABS Lending Indicators October 2021, released 2 December 2021, seasonally adjusted data.

Ms Tindall said: “First home buyers numbers continue to drop for the ninth month in a row, down 30 per cent from the peak in January of this year on the back of surging property prices and escalating interest from investors.”

“While proportionally first home buyers are being wedged out, over 140,000 owner-occupier first home buyer loans have been approved so far this year – that’s over 4,000 more loans than in 2020, with two months’ of data still to come. That’s no mean feat in what has been a very competitive market,” she said.

Fixing and refinancing dip, as fixed rates rise

The proportion of new fixed loans dropped to 43.5 per cent in October, down from the record-high of 46 per cent in July 2021.

External refinancing also continued to fall to a total of $16.08 billion in the month of October, down 0.4 per cent, month-on-month.

Value of externally refinanced loans in October

Amount in Oct 2021Monthly changeYear-on-year changeChange from 2 years ago

$16.08 billion

-$72 million

$4.04 billion

$6.27 billion

-0.4%

33.6%

63.8%

Source: ABS Lending Indicators October 2021, released 2 December 2021, seasonally adjusted data. Annual change is Oct 2020 to Oct 2021, and 2-year change is Oct 2019 to Oct 2021.

Ms Tindall said: “The drop in the proportion of borrowers opting for fixed rates is by not surprising. It comes on the back of months of fixed rate hikes and aggressive cuts to variable rates, which has changed the cost-benefit equation for many new borrowers and refinancers.” 

Screen Shot 2021-12-02 at 8.30.10 pm

Source: ABS.

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This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.

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