MORTGAGE lending accelerated beyond expectations in December, led by a surge in loans to owner occupiers and, in particular, first home buyers
The total number of owner-occupier loans for dwellings excluding refinancing lifted by a seasonally adjusted 3.5 per cent in December to $27.5 billion – the best monthly growth result since mid-2015.
Economists said the mortgage surge had its roots in the relaxing of lending standards last year, while three 0.25 per cent interest rate cuts since June has helped lower borrowing costs.
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READ NOWThere was a 5.1 per cent increase in the amount loaned to owner-occupiers for December to $14.2 billion, easily beating the 1.6 per cent increase tipped by the market, with the figure accelerating rapidly from the 1.6 per cent growth recorded in November.
The amount loaned to housing investors increased 2.8 per cent to $5.44 in December, up 4.9 per cent over the year, but still down on the March 2017 peak.
The December figure for investment lending still beat the expected 1.6 per cent increase.
NAB economist Kaixin Owyong said the data – in tandem with recent property price rises – suggested rate cuts and the relaxation of mortgage serviceability requirements in 2019 have encouraged household borrowing.
“The sharp turnaround in owner-occupier loan approvals over recent months is supporting a gradual turnaround in owner-occupier credit,” Ms Owyong said in a note.
The Aussie dollar rose from 66.86 US cents to 67.04 US cents within 40 minutes of the data being released.
It was first home buyers who set the pace according to Tuesday’s figures from the Australian Bureau of Statistics, with a 6.2 per cent increase for both the value and number of loans to new property owners during the month.
The growth in value of first home buyer loans accelerated from 2.1 per cent the month before, while the number of loans increased following a 0.9 per cent dip in November.
The 9,606 mortgages granted to first-time buyers in December were worth a combined $3.96 billion, representing a 38 per cent increase in value and a 21.3 per cent lift in volume for the year.
“The First Home Loan Deposit Scheme (that) commenced (in) January has had a strong take up, which will further propel first home buyer demand upwards in March quarter 2020,” BIS Oxford Economics principal economist Tim Hibbert said.
The value of loans for the construction of new houses rose 5.1 per cent after a 8.4 per cent drop in November.
Business lending also jumped, with the loans for construction up 4.4 per cent at $3.04 billion and loans for property purchases up 40 per cent at $6 billion.
The value of personal finance fixed term loan commitments rose 3.5 per cent in December following a 1.1 per cent fall in November, and were up 7.9 per cent on December last year.
