Lending to households dips month-over-month

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The value of new lending commitments to households, in seasonally adjusted terms, dropped 2.4% in January, and this follows a revised 3.6% monthly slide in December, according to the latest figures from Australian Bureau of Statistics (ABS).

The decline in lending for investment dwellings partly contributed to the overall fall in lending to households.

“Weaker lending for dwellings (-2.1%) again drove much of the overall fall in lending to households, with further falls in lending for investment dwellings (-4.1%) and for owner-occupier dwellings (-1.3%) in January," said ABS Chief Economist Bruce Hockman.

The national number of seasonally adjusted owner-occupier loans (excluding refinancing) was down 21% from the peak of the market in August 2017.

“Whilst housing turnover is weak, with loans for existing property down 13% y/y, appetite for new dwelling loans has fallen back sharply to 2013 levels. Owner-occupier demand continues to fall by double digits across the east coast states. (In) Queensland, despite solid population flows and a steady economy, demand declined 16% y/y for owner-occupiers whilst investor demand has fallen to its lowest level in over 17 years,” Maree Kilroy, economist at BIS Oxford Economics, said.

New lending for dwellings also dropped by more than 20% from January – the largest through-the-year decline since late 2008.

This weaker lending activity was evident across the states and territories in January, with new lending for investment dwellings down in all states and territories. Only Queensland and the Northern Territory recorded rises in lending for owner-occupier dwellings.

ABS also reported that the number of loans to owner-occupier first-home buyers (-0.3%) fell last month, but this was more stable than the 3.2% fall in the number of loans to owner-occupier non-first-home buyers.

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