Housing Finance Continues Decline
Housing loan approvals showed a further declines in January 2019 with significant falls for both owner occupiers (down 0.4% on last month) and investment loans (down 4.5% on last month).
Total lending for the month dropped -1.9% from December 2018 and remains down a staggering -20.5% lower than January 2018. The rate of decline in recently months has not stopped with total lending over the full 12 months to January 2019 down 11.3% on the prior correspondence period.
The latest decline was driven by a fall in owner occupier loans -0.4% and a fall in investor loans, -4.5%.
There is some evidence that banks are beginning to relax their lending criteria with ANZ one of the few banks promoting loans to investors announcing this week that it would again start offering customers an interest-only period of up to 10 years, up from five years now. ANZ will also allow interest-only loans where a customer has a deposit of 10 per cent of a property's value, where previously it required a 20 per cent deposit.
ANZ indicated it was prepared to relax its criteria following APRA's decision in December to remove the cap in the growth of interest-only mortgage lending, saying the restriction has served its purpose of reining in higher-risk loans and bolstering banks' credit standards.
Annualised credit growth has slowed it's decline as per the graph below. It will now be interesting to see how quickly a return to positive credit growth there will be. We suspect a slow return is more likley.