Home lending continues to drift lower

  • By AB+F Editorial

New lending to households continued to drive lower in December with the fall in the value of lending for owner occupier dwellings exceeding loans to investors.

According to figures from the Australian Bureau of Statistics, lending for owner occupier dwellings fell 6.4 per cent in December, compared with investment loans which fell 4.6 per cent.

However, compared to the December 2018 year before, investment dwellings fell 27.8 per cent – still above lending to owner occupiers at 16. 2 per cent.

Overall for the December year, new lending fell 19.8 per cent.

"The slowdown in lending for investor dwellings this month continues the steady decline over the past two years, with the value of new investor loan commitments down around 40 percent from the peak at the start of 2017,” ABS chief economist Bruce Hockman said.

“The slowdown in lending for owner occupier dwellings is more recent, with falls concentrated in the last half of 2018", he said.

In seasonally adjusted terms, the value of lending for owner occupier dwellings excluding refinancing fell in New South Wales (-6.1 per cent), Victoria (-6.6 per cent), Queensland (-9.9 per cent), Western Australia (-6.3 per cent), the Australian Capital Territory (-4.9 per cent), the Northern Territory (-18.3 per cent) and South Australia (-1.0 per cent). Tasmania (4.2 per cent) recorded the only rise this month.

“The accelerating fall in home loans show tighter credit is playing, out,” UBS economist George Tharenou said.

The economist believes that credit growth is likely to slow 2 per cent by 2020 and has revised his forecasts for house prices from a fall of 10 per cent to 14 per cent.

“We reiterate our non-consensus view that GDP growth slows sharply to 2.3 per cent in 2019, unemployment drifts up to 5¼ per cent and the Reserve Bank cuts in November 2019,” he said.