Surging investor lending has seen new mortgage commitments rise by 5.5 per cent across March to reach a record $30.2 billion, according to the latest figures from the Australian Bureau of Statistics.
The rise in March, spurred by continuing low interest rates, is the largest recorded since July, 2003 and was driven by increased loan commitments to investors for existing dwellings.
Lending to investors accounted for more than half of the rise.
The value of new loan commitments for investor housing rose 12.7 per cent to $7.8 billion in March—seasonally adjusted, that was 54.3 per cent higher than in March, 2020.
ABS head of finance and wealth Katherine Keenan said investor lending has seen a sustained period of growth since the 20-year low seen in May, 2020.
“The value of new loan commitments for owner occupier housing rose 3.3 per cent to $22.4 billion in March 2021, 55.6 per cent higher than March, 2020,” Keenan said.
“This rise was driven by an 8.8 per cent rise in the value of loan commitments for existing dwellings.”
The value of owner occupier loan commitments for the construction of new dwellings fell 14.5 per cent, the first fall since the HomeBuilder grant was introduced in June, 2020.
The federal government’s program of $25,000 stimulus payments— reduced to $15,000 after December—triggered a surge in demand for newly built homes
There are some signs to suggest borrowers could take their foot off the lending accelerator in the months to come.
While home prices continued to grow in April, an increase of 1.8 per cent, this was an easing from a 32-year high in March of 2.8 per cent.
Nevertheless, ANZ economists still see gains of between 15 per cent and 20 per cent for capital city prices in 2021.
Last week, APRA chairman Wayne Byres said lending standards were holding up “pretty well” and that any implementation of macroprudential measures would be triggered by risky behaviour inside financial institutions.
Addressing a committee for the Economic Development of Australia event, Byres said that regulatory settings were “broadly right”, given that the agency’s mandate was broader than just the stability of the financial system.
