First home changes propel lending

THE number of home loans approved has climbed faster than expected, driven by incentives for first home buyers in Victoria and NSW.

And investment property lending has recovered, but analysts say the banking regulator’s intervention in that market is still being felt.

A total of 57,161 home loans were approved in August, up 1 per cent from July, according to seasonally adjusted figures released yesterday by the Australian Bureau of Statistics.

It beat market expectations of a 0.5 per cent rise

The ABS attributed the lift to initiatives in Victoria and NSW, including the abolition or reduction of stamp duty for first-time buyers.

“The ratio of the number of first homebuyer loans to the total number of owneroccupier loans also increased strongly,” the ABS said.

“The increase has been driven mainly by changes to first home buyer incentives.”

In the investment property market, the value of loans issued rose 4.3 per cent over the month to $12.6 billion.

It surpassed a rise of 0.9 per cent in owner-occupier loans to push the rise in total housing finance to 2.1 per cent.

ANZ senior economist Daniel Gradwell said it was the biggest monthly increase in investor lending since the Australian Prudential Regulation Authority this year told the biggest banks to limit interestonly lending to 30 per cent of new mortgages.

Mr Gradwell said despite the recovery in investment property lending, the speed limit was still having an effect.

“This only just offsets the large fall in the previous month, and investor borrowing is still lower than it was earlier this year,” he said.

“In annual terms, investor growth of 6.5 per cent is well below the peak of 26 per cent recorded in January.”

The total value of housing finance rose to $33.9 billion in August. AAP