Record Investor Lending Delivers $11 Billion in New Home Loan Commitments

New home loan commitments to investors jumped 6.1% 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 ACT during the month, where the value of new loan commitments jumped 22.8%, while above-average increases were also recorded in Victoria ( 11.1%) and NSW (9.8%).

Meanwhile, the value of loans to investors in Queensland fell 1.7% but remained at historically high levels, according to the ABS.

“The value of new housing loan commitments from investors has increased for 15 consecutive months, in line with the strength of the housing market and the growth in property prices,” said Katherine Keenan, chief financial and investment officer. wealth at ABS.

“Despite record investor loan commitments, the share of investor loans in all new housing loan commitments was around one-third. This reflects the rapid growth in homeowner commitments over the past 18 months.

The total value of new loan commitments during the month beat market expectations, rising 2.6% to a record $33.7 billion on strong levels of investor activity.

Loans to homeowners rose 1.0% to $22.7 billion, with the strongest activity again seen in the ACT (33.5%), NSW (3.3%) and Victoria (3.2%).

“While investor activity has maintained strong momentum, homeowner activity, which has driven the cycle to date, appears to be approaching a peak as key segments begin to decline,” said Matthew Hassan. , senior economist at Westpac.

Nationally, the average loan size for homeowners rose $17,000 to a new high of $619,000, with new records reached in nearly every state and territory.

“The sharp increase in the average loan size for owner-occupied housing in January was due to an increase in the value of commitments and a virtually unchanged number of new loan commitments,” Ms. Keenan said.

Commonwealth Bank economists Stephen Wu and Kristina Clifton said while the surge in lending came as a surprise, the housing market was still expected to peak midway through the year.

“We continue to expect home lending to cool in 2022 as the RBA begins the process of cash rate normalization,” they said.

“Fixed lending rates have already risen in response to market expectations for rate hikes. And monthly house price growth also slowed.

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

Record Investor Lending Delivers $11 Billion in New Home Loan Commitments


Last update: March 03, 2022

Posted: March 03, 2022