In November 2015, first home-buyers accounted for 12.1% of the total value of the nation’s housing finance, up 0.2% on the prior month. At the other end of the finance spectrum, investors accounted for 44.1% of loan value, down from their peak of 53.5% in August 2015, signalling the prudential pressure on lending have probably begun to take hold.
We say ‘probably’ because the value of loans is not the only metric of relevance when considering lending ratios by type of borrower. The other measure of relevance is the proportion of actual loans issued. However, logically, on average first home buyers will be borrowing less than other borrowers because they are mainly younger and generally have less of a capital base to leverage. The likelihood is that increases in the proportion of loan value going to first home-buyers actually accounts for an even larger proportion in actual number of loan terms.
In any event, the chart below shows the value of housing loans approved over the last decade.
To go straight to the dashboard and take a closer look at the data, click here.
In January of 2015, as the loans to investors debate was being played out in the national media and the regulators (Reserve Bank of Australia and Australian Prudential Regulatory Authority) commenced a simultaneous movement on investing lending and bank liquidity, the proportion of the value of loans going to first home-buyers slumped to just 8.6%. This was its lowest level since records began and compares with more than 25% recorded in mid 2009.
The proportion rose to 12.1% in November 2015, demonstrating both that the regulators have had some success, but also that investors continue to be strong in the market. It is important to note that reported purchases by those living overseas have not reduced significantly in recent months and all of these are recorded as investor loans, which may be a relevant factor in considering the lending proportions.
Perhaps of greatest relevance is that loans to first-home buyers grew in November 2015 to AUD3.171 billion, while those to investors were stagnant after falling sharply since the beginning of the year. Loans associated with existing dwellings also continued their strong growth, driven mainly by refinancings, which crossed the AUD7 billion mark for the first time in November 2015.
Just as the mix of Australia’s residential dwellings is changing, so to is the mix of those taking loans and the amount of the national loan pool they are receiving.
