Australian home loans rose for a fourth consecutive month in August driven by investor lending, according to the latest figures from the government statistician.
Home loans rose 0.9 per cent month-on-month, according to the Australian Bureau of Statistics - higher than analysts’ predictions of 0.5 per cent growth.
Interestingly, investor loans posted the largest monthly increase since APRA moved to curb the flow of interest-only lending to 30 per cent of new lloans.
The regulation was on top of the prudential regulator's 10 per cent cap for growth in investor loans.
The value of loans to investors rose 4.3 per cent month-on-month, up from a 3.7 per cent dip in July.
However, according to ANZ economist, Daniel Gradwell, this only just offsets the large fall in the previous month and investor borrowing is still lower than it was earlier this year.
“In annual terms, investor growth of 6.5 per cent is well below the peak of 26 per cent recorded in January,' he said.
Still, the trend in investor lending growth will be closely monitored by the regulators, according to JP Morgan economist, Henry St John.
“APRA data for the second quarter showed banks making progress in reducing interest-only loans, though measures to date do not appear sufficient to slow credit growth in line with income growth, per the regulators' desire."
No net growth in Investor loans
In line with his ANZ counterpart, St John said while the strong lending values cuts against the grain of the recent trend, it is worth placing this within the broader context of the investor lending cycle.
At its peak, during the 2013 housing market upswing, investor lending grew as rapidly as 47.3 per cent, and represented closer to 45 per cent of total new lending, compared with 37.3 per cent now.
"August’s gain also comes after a slump of a similar magnitude in July, and there has been no net growth at all over the last three months."
While owner-occupier borrowing was flat in August, first home buyer lending picked up strongly driven by incentives in New South Wales and Victoria made in July.
ABS figures show the number of loans to first-time buyers in August was the highest since December 2009, giving first home buyers a 17.2 per cent share of the market, up from 16.6 per cent in July.
“The growth in new lending commitments going to first home buyers appears to have firmly broken its long-long-held range of between 13 and14 per cent of total lending in the last two months,” St John noted.