Housing investor loans drop to the lowest rate since 2009

By Kay Rivera | 01 Aug 2018

Housing investors moved steadily away from the Australian market in June, as seen in the private sector credit data released by the Reserve Bank of Australia (RBA) on Tuesday.

The central bank saw total housing credit increase by 0.3% in June, down from 0.4% in May. Consequently, yearly loan growth to housing investors reached a new record-low of 1.6%, as reported by Business Insider Australia.

Overall credit growth to housing investors went negative in June, sinking to -0.1%.

This dip is tied to the current market conditions. According to Commonwealth Bank Economist Belinda Allen, diminishing home values are discouraging investors.

 “This is reflected in weak auction clearance rates. Recent declines in the advertised rates of interest rates for loans also suggest softening in demand,” she said.

Allen also said the stricter lending standards brought on by the issues raised at the Royal Commission were affecting the supply side of the equation.

“This segment of the market is clearly slowing and is likely to continue to impact demand for housing and prices in the foreseeable future,” Allen noted.

Also included in RBA’s report was the broad money growth, which hiked by 0.2%. This brings the annual growth to just 1.9% — “the slowest rate of growth since the early 1990s recession.”

In addition, loans to owner-occupiers increased by 0.6% in June, with an overall yearly growth of 0.6%. Allen noted that decline in house prices may have paved the way for this increase. Finally, business lending rose by 0.3% in June after an unchanged rate in May.


Related stories:
Westpac Ends SMSF Property Lending
The Eight Month Home Loan Downturn


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