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Lending sags as investors kick against bricks Featured

Simon Johanson       March 14, 2012

HOME lending slumped in January as investors shunned bricks and mortar and New South Wales borrowers pulled back.

Home loan approvals dipped 1.2 per cent in January, the first fall

in 10 months, Australian Bureau of Statistics figures released yesterday show.

Economists had tipped lending commitments would be flat for the month. But the value of loans to investors fell 7.1 per cent, almost completely reversing a similar rise in December.
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The number of loans from banks to buyers for newly built homes fell 6 per cent, down in dollar terms by 2.1 per cent for the month. Total value of lending to both home buyers and investors fell in January by 2.3 per cent, down to $20.732 billion.

That fall came after slightly bigger rises in the previous two months when the Reserve Bank cut interest rates and investors reacted by borrowing more.

December's data showed a rise of 2.3 per cent in the number of home loans approved for the month, while the value of housing finance rose by 3.8 per cent.

The ABS figures reflect a tentative start to the housing market this year with sale volumes in capital cities down and fewer homes on the market.

The proportion of first home borrowers were down slightly on the previous month.

According to CommSec economists, the average home loan across Australia stood at $291,300, a reduction of 2.3 per cent from the year before.

The winding back of stamp duty concessions in NSW this year meant fewer first home buyers were entering the market, Westpac senior economist Andrew Hanlan said. As a result, housing finance in NSW slumped 6.3 per cent.

Investors were ''lukewarm'' despite better rental returns, Mr Hanlan said. ''The prospect of sizeable capital gains are just not there. Households are just not looking to take on debt in a big way.''

Weak house prices, rising unemployment and the high Australian dollar were having an impact, he said.

Read more: https://www.smh.com.au/business/lending-sags-as-investors-kick-against-bricks-20120313-1uyen.html#ixzz1pWcPWIkp

Last modified onTuesday, 28 May 2013 09:25

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