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Wednesday, 12 October 2016
Pendulum swinging back to investment loans
Investment loans return
Total Housing Finance came in at $31.4 billion in August, some way below the record high of $33 billion touched in August last year.
Regulatory intervention has tapped on the housing market brakes rather successfully it seems.
That said, investment lending rose for a cheeky 6th month from the past seven.
Plus, I'm not so sure I'd take the split between home and investment lending too literally - I'm not sure the financiers even know themselves what the true picture is.
In trend terms reported investment lending has snuck back up from $11.05 billion in December 2015 to $11.91 billion, though still well down from the peak of $14.1 billion in April 2015.
The number of owner-occupier commitments fell for a second consecutive month.
Indeed, smoothing the figures on a trend basis shows that the number of commitments has been sliding for the whole of 2016 to date.
This in part reflects the number of investors creeping back into the market, as well as genuine market weakness in some resources states.
State versus state (QLD recovers)
At the state level the declining number of owner-occupier commitments is most evident in New South Wales, Victoria, and Western Australia.
The dollar value of owner-occupier commitments is only trending up solidly in Queensland and Tasmania. South Australia was travelling pretty well until lately, but has now flattened.
Overall, the pendulum seems to be shifting back towards investment loans, with the market becoming unbalanced again and commitments rising steadily in 2016, albeit at a less frantic pace than before.
I'll analyse the investment loan sector in more detail and at the state level later in the week.
It doesn't help the regulator much that the data concerning the stock of outstanding credit is hopelessly unclear.
But my best guess is that if investment loans continues to rise the regulator will tweak the dials again specifically to wind back new interest only credit.