Q1 2017 March Housing Finance Update

The March 2017 figures for home loans released by the ABS this week showed a further increase in the value of new loan commitments by 1.3% with an increase in owner occupied housing of 1.7% and an increase in investment housing of 0.8%.

Despite what the headlines may lead us to believe, the controls imposed by APRA have had a significant affect on the lending since late 2015 which followed 3 years of annualised credit growth of greater than 10%.

The number of owner occupied housing commitments excluding refinancing (trend) rose 0.7% in March 2017, following a rise 0.8% in February 2017. Due to some significant reductions in the last part of 2016, the annual growth in owner occupier loans is now at 1.1%, down from a peak of 13.4% in May 2016.

Investor loans have been rebounding strongly since a low in August 2016 with annual growth now at 2.4%. The graph below shows how strongly the rebound has been following the low of -16% in August 2016, however in contrast to the peak of 38.5% in June 2014, credit growth is far from bubble territory.

The seasonally adjusted estimates fell in Victoria (down 237, 1.5%), Western Australia (down 215, 3.7%), Queensland (down 210, 2.0%) and South Australia (down 145, 3.7%), while rises were recorded in New South Wales (up 57, 0.3%), the Australian Capital Territory (up 56, 5.5%), Tasmania (up 46, 4.5%) and the Northern Territory (up 23, 7.3%).

The number of first home buyer commitments as a percentage of total owner occupied housing finance commitments rose to 13.6% in March 2017 from 13.3% in February 2017

The value of all loans issued over the past 12 months to Owner Occupiers and Investors (excluding Owner Occupier re-financing) compared to the previous 12 months is up 1.7%, well below the cap of 10% that APRA were seeking to achieve.

Whilst the ABS data captures traditional retail, wholesale and non-bank lending, they are unlikely to be capturing all of the non-bank lending across the market.

See full ABS release