The $33.2 billion worth of commitments can be subdivided into $19.9 billion in commitments to owner occupiers and $13.3 billion in commitments to investors.
As noted by Cameron Kusher, head of research at CoreLogic, lending to owner occupiers has shown little change over recent months. “In the value of owner occupier finance, commitments has held reasonably steady between $19.7 billion and $19.9 billion for each of the past five months.”
In contrast, demand from the investor segment has continued to climb with the $13.3 billion representing the highest monthly value of lending to this segment since June 2015. After the value of lending to investors peaked at $14.6 billion in April 2015, it declined by -25.8% to $10.8 billion in April 2016.
“Between April 2016 and November 2016, the monthly value of lending to investors has increased by 22.4% and is now just -9.2% lower than its historic high and seemingly likely to rise further over the coming months,” Kusher said. “If finance commitments for refinancing [are] excluded, investors accounted for 49.6% of mortgage borrowing in November 2016, its highest proportion since July 2015.”
The momentum in owner occupier demand seems to have stalled over recent months and could be largely due to a slowdown in finances.
The $19.9 billion in lending to owner occupiers in November 2016 consisted of:
- $1.8 billion for the construction of dwellings
- $1.1 billion for the purchase of new dwellings
- $6.4 billion for the refinancing of established dwellings
- $10.6 billion for the purchase of established dwellings
Although overall lending to owner occupiers has hardly shifted over recent months, the recent out-of-cycle interest rate increases that some lenders have undertaken may result in a spike in refinance activity over the coming months, which in turn may push owner occupier lending higher.
Related stories:
Housing Demand Rises For Investors, Declines For Owner-Occupiers
Home Loan Decline ‘No Cause For Alarm’, Says HIA
