Housing boom starts to cool as investor credit takes hit

THE amount of credit offered to property investors took its biggest monthly fall in more than two years during September in a further sign of a cooling housing boom.

By value, home loans offered to investors fell 6.2 per cent in the month to $11.8 bil- lion, according to new seasonally adjusted figures from the Australian Bureau of Statistics.

The sharp decline more than offset unusually strong lending in August, JP Morgan economist Henry St John said.

“Investor lending was unambiguously weak in September, and provides further evidence that August’s modest uptick against the trend was more noise than anything else,” he said.

“The bearish trend in investor lending since April is wellestablished now, and these numbers will weigh on investor credit growth over the coming months.”

In March, the Australian Prudential Regulation Authority told lenders to cap interest-only mortgages at 30 per cent of all home loans by value.

That prompted a round of rate increases from banks that made interest-only and investor loans more expensive.

Loans to owner-occupiers slipped 2.1 per cent in September, dragging overall housing finance 3.6 per cent lower to $32.5 billion in the month.

The number of home loan approvals dropped 2.3 per cent in September, missing market expectations for an increase of 1.5 per cent.

ANZ economist Daniel Gradwell said the lending figures and falls in auction clearance rates suggested the housing market would cool further for the rest of the year and into 2018.

The release of the finance figures yesterday morning triggered a brief fall in the Australian dollar, which slipped to a low of US76.64¢.

It recovered as the day wore on and was buying US76.81¢ late yesterday.