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The annual growth in housing credit is at its lowest level since November 2013, while investor credit growth is at a historic low, new analysis has revealed.
According to CoreLogic’s Property Pulse report, which analyses credit data from the Reserve Bank of Australia, in the 12 months to September 2018 housing credit grew by just 5.2 per cent.
This growth was divided between a 7.3 per cent rise in credit to owner-occupiers, the slowest since November 2015, and a significantly low increase of just 1.4 per cent for investors.
While investors are overwhelmingly driving the slowdown of credit expansion (at 33.1 per cent of the total credit share), this is the smallest share attributed to investors since June 2012 and is significantly lower than the peak of 38.7 per cent in June 2015.
The report noted that there has been a deceleration in demand from owner-occupiers, with the group’s housing credit increasing by just 0.5 of a percentage point in the month of September.
In the same period, investor credit expanded by 0.1 of a percentage point, signalling a slowdown in commitments for both borrower types.
Monthly housing finance data matches these figures, showing that demand for new mortgages has slowed for both groups with lending trending lower.
The slowdown in credit growth is partially attributed to a fall in new interest-only lending, according to quarterly data from APRA, with more borrowers switching from interest-only to principal and interest mortgages before expiry.
In fact, interest-only mortgages made up only 28.8 per cent of total credit in June 2018, a significant fall from its previous high of 39.5 per cent.
The report suggested that the combination of decreased demand for owner-occupier and investor mortgages and the trend of borrowers switching from interest-only to paying down their principal may slow growth in housing credit in the future.
“Add to this the fact that lenders are reducing their exposure to high levels of borrower debt relative to incomes and increasing their focus on borrower serviceability, the outlook for housing credit could contract further from here,” the report concluded.
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he annual growth in housing credit is at its lowest level since November 2013, while investor credit growth is at a historic low, new analysis has revealed.According to CoreLogic’s Property Pulse report, which analyses credit data from the Reserve Bank of Australia, in the 12 months to September 2018 housing credit grew by just 5.2 per cent.
This growth was divided between a 7.3 per cent rise in credit to owner-occupiers, the slowest since November 2015, and a significantly low increase of just 1.4 per cent for investors.
While investors are overwhelmingly driving the slowdown of credit expansion (at 33.1 per cent of the total credit share), this is the smallest share attributed to investors since June 2012 and is significantly lower than the peak of 38.7 per cent in June 2015.
The report noted that there has been a deceleration in demand from owner-occupiers, with the group’s housing credit increasing by just 0.5 of a percentage point in the month of September.
In the same period, investor credit expanded by 0.1 of a percentage point, signalling a slowdown in commitments for both borrower types.
Monthly housing finance data matches these figures, showing that demand for new mortgages has slowed for both groups with lending trending lower.
The slowdown in credit growth is partially attributed to a fall in new interest-only lending, according to quarterly data from APRA, with more borrowers switching from interest-only to principal and interest mortgages before expiry.
In fact, interest-only mortgages made up only 28.8 per cent of total credit in June 2018, a significant fall from its previous high of 39.5 per cent.
The report suggested that the combination of decreased demand for owner-occupier and investor mortgages and the trend of borrowers switching from interest-only to paying down their principal may slow growth in housing credit in the future.
“Add to this the fact that lenders are reducing their exposure to high levels of borrower debt relative to incomes and increasing their focus on borrower serviceability, the outlook for housing credit could contract further from here,” the report concluded.
You are not authorised to post comments.
Comments will undergo moderation before they get published.