Housing Loans

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<span style="line-height: 1.3em;">APRA </span><span style="line-height: 1.3em;">released</span><span style="line-height: 1.3em;"> its latest property exposures figures for the June 2015 quarter today, which confirmed an ongoing surge in new housing loans. </span>
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<div><span> </span></div>
<div><span>As at June 2015 the total of residential term loans to households held by all institutions (ADIs) was $1.33 trillion. </span></div>
<div><span> </span></div>
<div><span>In total this represented an increase of +$31.8 billion (+2.4%) from the prior quarter, and a solid increase of +$97.1 billion (+7.9%) over the year to June.</span></div>
<div><span> </span></div>
<div><span>There were a total of 5.4 million loans outstanding, with an average balance of $243,000.</span></div>
<div><span> </span></div>
<div><span><strong><span style="text-decoration: underline;">Investment loans surging higher</span></strong></span></div>
<div><span> </span></div>
<div><span>Investment loans totalled $518.3 billion, an increase of +$17.7 billion (+3.5%) from the March quarter and massive +$81.1 billion (+18.6%) from one year ago.</span></div>
<div><span> </span></div>
<div><span>That's huge, and well ahead of the rate that the regulator would or should be comfortable with.</span></div>
<div><span> </span></div>
<div><span>Interestingly while loans held by the major banks increased by +7.5% over the past year to $1,076 billion, loans held by other domestic banks increased by a much faster +18.8% pace to $155 billion.</span></div>
<div><span> </span></div>
<div>The major banks still accounted for close to 80 per cent of the domestic new housing loan market, however, with the remainder of the market comprising other banks, credit unions and particularly building societies.</div>
<div><span> </span></div>
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<span>It should be noted that there have been a few issues relating to the reclassification of loans between owner-occupied and investment loans, with material revisions (&gt;10%) pushed through for the September 2014 to March 2015 quarters relating to ANZ and National Australia Bank.</span><br><span><br></span><span>You can see the jump in the chart below. </span><br><span><br></span><span>This has had the impact of accentuating the rate of increase in investment loans while dampening the growth in owner-occupier loans. </span>
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<div><span> </span></div>
<div><span>In any case the trend in <strong>total </strong>loans outstanding since March 2008 has been more than clear, with total residential term loan exposures captured by this data more than doubling over that time.</span></div>
<div><span> </span></div>
<div><span>This is at least partly because the investor segment of the market often opts to amass new debt rather than paying loan balances down, particularly because Australia has prevailing tax legislation which encourages this behaviour.</span></div>
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<div><a href="/images/2015/08/26/APRA1.jpg" target="_blank"><span>Click to enlarge</span></a></div>
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<div><span><img src="/images/2015/08/26/APRA1.jpg" alt=""></span></div>
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<div>The data revealed that the overwhelming majority of new housing loans in the quarter at 89.3 per cent of new loans were of a loan to value ratio (LVR) of 90 per cent or lower. </div>
<br><div>As denoted by the pink area in the chart below there has been a surge in the number of borrowers using 20 to 40% deposits, now accounting for more than half of new housing loans in the last quarter.<br><br>This may imply that "cashed up" property owners with deep pools of equity are buying investment property at the expense of first time buyers who must save their deposits. </div>
<div> </div>
<div>More than one fifth of new loans in the quarter had a very low loan to value ratio of just 60% or lower.</div>
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<div><a href="/images/2015/08/26/APRA2.jpg" target="_blank">Click to enlarge</a></div>
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<div><img src="/images/2015/08/26/APRA2.jpg" alt=""></div>
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<div>Higher risk "low doc" loans continued to represent only a tiny fraction of the Australian mortgage market in the June quarter at 0.4 per cent.</div>
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<div><strong><span style="text-decoration: underline;">Market risks</span></strong></div>
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<div>With very few low doc loans written and the overwhelming majority of loans being written with deposits ranging from 10 to 40 per cent, where lies the risk?</div>
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<div>After all, it is hardly as though the market is highly leveraged in aggregate with aro<span>und <span>~</span>$1.4 trill</span>ion of debt sitting against a stonking $6 trillion residential housing market.</div>
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<div>For my money, in terms of the residential mortgage market the answer is that the risk lies in the very high percentage and concentration of interest only loans, whereby typically no repayments are made against the principal in the first five years. </div>
<div> </div>
<div>It is true that loans with offset facilities are continuing to flourish, but nevertheless a whopping 45.8% of new housing loans written in the June 2015 quarter were of the interest only variety.</div>
<div> </div>
<div>Although only 4% of new housing loans in the June quarter were written outside serviceability, it would not be a surprise to see APRA looking more closely at the elevated percentage of interest only loans with renewed interest.</div>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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Investment loans power on: Pete Wargent

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<div>EXPERT OBSERVER</div>
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<div>Housing conditions were strong up until the end of February, the last of the pre-Coronavirus data series showed. </div>
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<div><span style="font-size: 12.16px;">Total housing lending was fairly steady at $19.5 billion, representing an increase of +13.1 per cent from a year earlier, mainly driven by homebuyers. </span></div>
<p><span style="font-size: 12.16px;"><img src="https://1.bp.blogspot.com/-Tj7kB74Cv28/Xo048SI75LI/AAAAAAAA1Jg/s4CFqoIWW4gX7Mo97meC-8FgegCjW6M7wCNcBGAsYHQ/s640/HF2.jpg" width="640" height="366" data-original-height="824" data-original-width="1440"></span></p>
<p><span>First homebuyer commitments rose to the highest level since 2009.</span></p>
<p><br><img src="https://1.bp.blogspot.com/-7d99RZVWWZM/Xo048PZtQVI/AAAAAAAA1JY/mkyCDs4_KPUAmZJBb1bFWbRLACAWaY3awCNcBGAsYHQ/s640/HF3.jpg" width="640" height="378" style="font-size: 12.16px;" data-original-height="828" data-original-width="1398"></p>
<div>At the state level, homebuyer loans (ex-refi) in Queensland and Western Australia were strong, while New South Wales and Victoria saw a partial retracement, although volumes in these states remained +15 per cent and +20 per cent higher than a year earlier respectively.</div>
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<div class="separator"><img src="https://1.bp.blogspot.com/-Kiyhs8_oEo4/Xo048QGK6oI/AAAAAAAA1Jc/2-ANgNnHLDsVHpZypHKAfi0zxh4AET7kQCNcBGAsYHQ/s640/HF1.jpg" width="640" height="380" data-original-height="829" data-original-width="1392"></div>
<p><span style="font-size: 12.16px;">For home buyers purchasing existing dwellings the average loan size was steady at a near-record high.</span></p>
<div class="separator"><img src="https://1.bp.blogspot.com/-_n553QTxyPs/Xo049K_1vkI/AAAAAAAA1Jk/ubZ9VV4Y3DUgx9yKI7xSyX2DLjkbaiB5QCNcBGAsYHQ/s640/HF4.jpg" width="640" height="382" data-original-height="818" data-original-width="1369"></div>
<p><span>There was some variation around the states, partly impacted by refinancing activity.</span></p>
<div class="separator"><img src="https://1.bp.blogspot.com/-V0wxrfOsSto/Xo049Qhu3uI/AAAAAAAA1Jo/ibRdXCV_EdMM0hP04S3mmFceQHshcVOkgCNcBGAsYHQ/s640/HF5.jpg" width="640" height="374" data-original-height="831" data-original-width="1421"></div>
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<strong>The wrap</strong><br><br>Overall, lending volumes were considerably stronger than a year earlier up until February 2020, but transaction activity is now expected to drop sharply through March and April as movements are restricted. </div>
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<strong><br class="Apple-interchange-newline">PETE WARGENT</strong><em> is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em>
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j.ballantyne1990-6AQqhLzZaK

Housing loans declined slightly in February: Pete Wargent

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<p>The May 2020 Lending to Households and Business figures released today by the Australian Bureau of Statistics show the largest monthly fall in the history of the series with the value of loans for housing falling by 11.6 per cent in seasonally adjusted terms.</p>
<p>The fall is not unexpected with feedback from agents during May, as restrictions on movements throughout the month were in place and a general air of caution about the economy and its impact on activity in the housing market prevailed, suggesting that this would be the case.</p>
<p>The fall was driven by large reductions in the value of loan commitments for housing in New South Wales and Victoria and contributed to the yearly fall of 7.3 per cent. Smaller falls were reported for all other states except ACT.</p>
<p>The value of new loan commitments for investor housing fell 15.6 per cent for the month and 11.9 per cent for the year - again driven by Victoria and New South Wales.</p>
<p>New loan commitments for owner occupier first home buyers fell by a similar proportion to the overall fall in owner occupier commitments for dwellings with a fall of 10.5 per cent by value for the month in seasonally adjusted terms but a 19.3 per cent increase for the year.</p>
<p>NSW and Queensland drove the fall in the number of loan commitments for owner occupier first home buyers with all other states except ACT recording falls.</p>
<p>While reduced transactions in the housing market stifled new loan activity in May, the markets have held up through a low level of supply. A situation that is continuing in the larger markets.</p>
<p><strong>Adrian Kelly</strong><em> is the President of the Real Estate Institute of Australia. </em></p>
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May housing finance shows a historical fall: REIA's Adrian Kelly

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<p>The Australian Prudential Regulatory Authority has released a proposal that will require banks to differentiate risk weightings for residential mortgages.</p>
<p>It could potentially increase the cost of writing higher-risk loans.</p>
<p>The proposal seeks changes to the risk weightings banks should apply to owner-occupier, investor, interest-only and non-standard loans.</p>
<p>The paper noted APRA's view that there are "potential systemic vulnerabilities" to the financial system created from high levels of residential mortgages lending for investment purposes.</p>
<p>The Australian Broker news website reported ANZ and Westpac Group had introduced confidential changes to their assessment and approval of borrowers.</p>
<p>ANZ was adjusting the discretion available for its frontline mortgage assessors.</p>
<p>A spokesman for ANZ said the bank recently added "a higher level of approval for some discretions" used in its home loan policy for assessing serviceability.</p>
<p>Mortgage brokers claim banks seem to be showing less flexibility in interpreting guidelines on such matters as irregular income when assessing loan applications, BrokerNews advised after a report in the <em>AFR</em>.</p>
<p>The report also said that Westpac recently introduced strict tests of residential property borrowers' current and future capacities to repay their loans.</p>
<p>The change is said to be intended to identify scenarios that might affect borrowers' capacity to pay back their loans. These include having dependents with special needs that might require borrowers to spend on long-term care and treatment.</p>
<p>When asked for comment, a Westpac spokesperson told <em>Australian Broker </em>that the <em>AFR</em> report was based on a note the bank sent to brokers on Monday (12 February).</p>
<p>Earlier this month, Westpac amended its borrowing terms, including allowing the use of desktop valuations only for a maximum LVR of 90%.</p>
<p>A Westpac spokesperson told <em>Australian Broker </em>that the bank has also updated its household expenditure measure in line with the benchmark published by the Melbourne Institute for Social and Economic Research.</p>
<p>This followed Westpac's announcement in December that it would require home loan borrowers to disclose what they owe on short-term buy-now, pay-later loans on digital credit platforms like AfterPay and ZipPay. </p>
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High risk home loans targeted by APRA

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<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/04/ratecity-logo.jpg" alt="" width="661" height="177"></p>
<p>SPONSORED POST</p>
<p>Don’t make the mistake of setting your mortgage and forgetting about it for the next 25 years – because it could cost you dearly.</p>
<p>One obvious <a href="https://www.ratecity.com.au/home-loans/refinancing-home-loans?utm_source=propertyobserver&amp;utm_medium=referral&amp;utm_campaign=rcsale_propertyobserver_article4&amp;rmatt=tsid:1030695%7Ccid:54369%7Ccgid:543693734136%7Ccrid:15969009" target="_blank">benefit of refinancing</a> is that it gives you the chance to switch to a cheaper rate. Don’t forget, home loans are always changing, so even if you got the cheapest rate when you took out your mortgage, there’s a good chance that’s no longer the case.</p>
<p>Another benefit of refinancing is that it could allow you to access more flexible repayment terms, unlock equity to fund an investment property and consolidate a range of debts.<span style="font-size: 12.16px;"> </span></p>
<p>RateCity has made it easy to change lenders with its <a href="https://www.ratecity.com.au/sale?utm_source=propertyobserver&amp;utm_medium=referral&amp;utm_campaign=rcsale_propertyobserver_article4&amp;rmatt=tsid:1030695%7Ccid:54369%7Ccgid:543693734136%7Ccrid:15969009" target="_blank">Switch &amp; Save Sale</a>. Here are the top five reasons to take part:</p>
<p><span style="text-decoration: underline;">1. Change to a cheaper home loan</span></p>
<p>Refinancing into a cheaper mortgage makes obvious sense. However, sometimes people don’t realise how much money they could save.</p>
<p>Imagine you had an interest rate of 4.25 per cent on a $400,000 mortgage that you were repaying at the rate of $2,500 per month. If you switched to a rate of 4.00 per cent and left your monthly repayments unchanged, your loan term would be reduced from 19 years and nine months to 19 years and two months. That would allow you to eliminate seven months of repayments, for a $17,500 saving.</p>
<p><span style="text-decoration: underline;">2. Change to a better home loan</span></p>
<p>Another advantage of refinancing is that it can allow you to move to switch to a more flexible mortgage.</p>
<p>That could allow you to access new features such as an offset account, a redraw facility, the ability to make extra repayments or even the ability to take a repayment holiday. You could also move to a fixed rate or move to a variable rate or move to a loan that is half and half.</p>
<p><span style="text-decoration: underline;">3. Unlock equity to fund an investment property</span></p>
<p>In certain circumstances, refinancing your home will allow you to access extra funds that you could then use as a deposit on an investment property.</p>
<p>To unlock extra equity, you need to get a new valuation on your home when you refinance, and that new valuation needs to be higher than the old one.</p>
<p>Imagine you originally borrowed $400,000 to purchase a $500,000 property – that would have given you a loan-to-valuation (LVR) ratio of 80 per cent. Now imagine you’ve since reduced your mortgage to $370,000 while the value of your home has risen to $550,000 – that would give you a new LVR of 67 per cent.</p>
<p>If your new lender allows you to increase your LVR to 80 per cent, you could increase your mortgage from $370,000 to $440,000. That extra $70,000 could then be used as a deposit on an investment property.</p>
<p><span style="text-decoration: underline;">4. Unlock equity to fund other expenses</span></p>
<p>Of course, there are other ways you could spend that hypothetical $70,000 mentioned above. You could use it to fund value-adding renovations. You could use it to replace your old car. Or you could put it into an offset account and spend it several years in the future.</p>
<p><span style="text-decoration: underline;">5. Consolidate debt</span></p>
<p>Imagine you were currently paying off a $370,000 mortgage at 4.25 percent, a $25,000 personal loan at 9.75 percent and a $15,000 credit card debt at 16.50 percent.</p>
<p>A new lender might allow you to refinance those three debts into a single $410,000 mortgage. Even if your new home loan was still priced at 4.25 percent, this sort of consolidation would not only make your life simpler, it would also allow you to repay the personal loan and credit card at a much cheaper rate.<span style="font-size: 12.16px;"> </span></p>
<p><span style="text-decoration: underline;">Refinancing made easy</span></p>
<p>RateCity is simplifying the refinancing process with its <a href="https://www.ratecity.com.au/sale?utm_source=propertyobserver&amp;utm_medium=referral&amp;utm_campaign=rcsale_propertyobserver_article4&amp;rmatt=tsid:1030695%7Ccid:54369%7Ccgid:543693734136%7Ccrid:15969009" target="_blank">Switch &amp; Save Sale</a>, which will give borrowers access to market-leading rates.</p>
<p>Borrowers who are with ANZ, Commonwealth Bank, NAB or Westpac could save up to $39,000 over 15 years by switching through the <a href="https://www.ratecity.com.au/sale?utm_source=propertyobserver&amp;utm_medium=referral&amp;utm_campaign=rcsale_propertyobserver_article4&amp;rmatt=tsid:1030695%7Ccid:54369%7Ccgid:543693734136%7Ccrid:15969009" target="_blank">Switch &amp; Save Sale</a>.</p>
<p>RateCity arrived at that figure after calculating how much borrowers would save if they switched from an average-sized mortgage from the average discounted variable rate offered by one of the big four banks to the lowest variable rate in the <a href="https://www.ratecity.com.au/sale?utm_source=propertyobserver&amp;utm_medium=referral&amp;utm_campaign=rcsale_propertyobserver_article4&amp;rmatt=tsid:1030695%7Ccid:54369%7Ccgid:543693734136%7Ccrid:15969009" target="_blank">Switch &amp; Save Sale</a>.</p>
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jchancellor-FAypfDUnLy

5 reasons you must refinance your home loan: RateCity

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<p>GUEST OBSERVER</p>
<p>Private sector credit rose by 0.3 percent in February after a 0.2 percent gain in January. Annual credit growth of 5.0 percent is near 3-year lows.  </p>
<p>Investor housing: Investor housing finance lifted by 0.6 per cent in February to stand 6.7 per cent higher over the year – the fastest growth in 12 months.  </p>
<p>China data: The National Bureau of Statistics manufacturing purchasing managers’ index rose from 51.6 to 51.8 in March while the services gauge rose from 54.2 to 55.1 – a near 3-year high.  </p>
<p>What does it all mean?</p>
<p>The latest lending (private sector credit) figures suggest a subdued borrowing environment. But it is important to point out that lending recorded the biggest lift in 15 months in December and only partially gave back some of that out-sized growth over January and February. The subdued February reading was largely due to a modest slide in business credit which would be expected given the out-sized gain in December. The key will be how business borrowing performs in coming months.  </p>
<p><a href="https://www.propertyobserver.com.au/images/2017/04/02/Screen%20Shot%202017-04-03%20at%208.47.27%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/04/02/Screen%20Shot%202017-04-03%20at%208.47.27%20AM.png" alt=""></p>
<p>Interestingly home lending continues to lift, dominated by investor credit growth. In fact annual growth in investor finance is now at a 12-month high. The measures taken over the last couple of year by regulators to curb investment lending had a temporary impact that has faded. And as such it is no surprise that the regulators have today looked at other avenues to tighten lending standards.  </p>
<p>The measures announced by APRA today are designed to keep modest pressure on the brakes of investor home lending rather than represent a slamming on the brakes. Annual growth of investor lending still remains comfortably below the 10 per cent annual growth limit although new lending has been lifting in recent months. Anecdotally the lift in interest rates on investor housing loans is already acting to slow interest in home buying.  </p>
<p>The stronger Chinese manufacturing and services data bodes well for the broader global economy. And given the strong trade links between Australia and China, policymakers would be encouraged by a strengthening Chinese economy.  </p>
<p>No doubt policymakers will continue to discuss key issues like housing affordability, but overall the central bank seems upbeat on the medium-term outlook for the Australian economy. CommSec expects no change to interest rates over the rest of 2017.  </p>
<p>What do the figures show?  </p>
<p>Private sector credit  </p>
<p>Private sector credit (lending) rose by 0.3 per cent in February after a 0.2 per cent gain in January. Annual credit growth eased from 5.4 per cent to a near 3-year   low of 5.0 per cent.</p>
<p>Housing credit grew by 0.6 per cent in February to be up 6.4 per cent on a year ago – annual growth is lifting of the lowest levels in 30 months.  </p>
<p>Owner occupier housing credit rose by 0.5 per cent in February to stand 6.2 per cent higher than a year ago – the slowest growth in 17 months. Investor housing finance lifted 0.6 per cent in February to stand 6.7 per cent higher over the year – the fastest growth in 12 months.  </p>
<p>Personal credit fell by 0.1 per cent in February to be down 1.3 per cent over the year – just up from the 1.4 per cent annual decline in January, which was the biggest annual decline in 41⁄2 years.  </p>
<p>Business credit fell by 0.1 per cent in February after a 0.4 per cent fall in January and 1.1 per cent rise in December. Business credit is 3.7 per cent higher than a year ago – slowest growth in 21⁄2 years.  What is the importance of the economic data?  </p>
<p>Private sector credit figures are released by the Reserve Bank on the last working day of the month. Credit is separated into three categories – housing, other personal and business. Private sector credit is effectively the amount of loans outstanding in the economy. If growth in lending is strong then it suggests that credit from financial institutions is freely available, underlying demand for assets such as cars and houses is firm and that the price of credit (interest rates) is attractive.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/04/02/Screen%20Shot%202017-04-03%20at%208.46.29%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/04/02/Screen%20Shot%202017-04-03%20at%208.46.29%20AM.png" alt=""></p>
<p>What are the implications for interest rates and investors?</p>
<p>The Chinese economic data remains encouraging, showing that the transition from the industrial sector to household sector remains on track. The manufacturing sector is expanding, while the services sector is clearly the driver taking up any slack.  </p>
<p>Interest rates are super-low but credit growth is slowing rather than rising. Excluding investor housing, demand for loans is modest. Consumers and businesses are still keen to pay down debt rather than take up new credit.  </p>
<p> Interest rates will remain on hold over the rest of 2017.  </p>
<p><em>Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a></em></p>
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Investor lending dominates borrowings: CommSec's Savanth Sebastian

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<p>The level of delinquent housing loans for prime residential mortgage-backed securities increased 1.29 percent in January from December's 1.15 percent, according to S&amp;P Global Ratings.</p>
<p>The category for mortgages 31-60 days in arrears showed the largest increase.</p>
<p>The report said the magnitude of the month-on-month increase in January 2017 was higher than in previous months.</p>
<p>"While some of the increase is due to a decline in outstanding loan balances, the category for mortgages 31-60 days in arrears showed the largest increase," the report found.</p>
<p>"This suggests more borrowers have fallen behind on their loan repayments for the first time.</p>
<p>"The major bank and regional bank sectors recorded larger increases in borrowers who are 31-60 days behind on their mortgage repayments.</p>
<p>"All originators except nonbank financial institutions recorded an increase in arrears in January compared with the previous month.</p>
<p>"Despite the increase, arrears levels in January remained close to long-term averages."</p>
<p>"Mortgage arrears rose in every state and territory in January from the previous month.</p>
<p>"Among the states, South Australia recorded the largest increase in arrears, rising to 1.81 percent from 1.53 percent in December, Home loan arrears in Western Australia rose to 2.33 percent in January from 2.10 percent in December.</p>
<p>"Arrears rose month on month in January to 1.03 percent in New South Wales and 1.18 percent in Victoria."</p>
<p>The report can be found at <a href="https://www.sfsurveillance.com.au/" target="_blank">https://www.sfsurveillance.com.au</a>.</p>
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Home loan delinquencies rise in January

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<p><span>Dwelling value growth increase in Sydney and Melbourne is substantially higher than any other capital city, according to CoreLogic head of research Cameron Kusher.</span></p>
<p><span>He said the </span><span>current housing market growth phase has really been all about Sydney and Melbourne. </span><span><br></span></p>
<p><a href="https://www.propertyobserver.com.au/images/2017/02/23/Screen%20Shot%202017-02-23%20at%202.04.38%20PM.png" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="https://www.urban.com.au/images/2017/02/23/Screen%20Shot%202017-02-23%20at%202.04.38%20PM.png" alt=""></span></p>
<p><span>"The change in capital city dwelling values over the current growth phase began to take off in June 2012," he said.</span></p>
<p><span>"Over this period, only Sydney and Melbourne recorded value rises greater than 21 percent. </span></p>
<p><span>“The </span><span>rise in values has been supported by low interest rates and availability of mortgage finance however, other factors such as localised economic performance, population growth and foreign demand have driven the much stronger growth in Sydney and Melbourne than across the other capital cities.</span></p>
<p>“With the demand focused so much on New South Wales and Victoria, it’s not surprising values in Sydney and Melbourne have increased so much more than in the other capital cities.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/02/23/Screen%20Shot%202017-02-23%20at%202.05.53%20PM.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/02/23/Screen%20Shot%202017-02-23%20at%202.05.53%20PM.png" alt=""></p>
<p>“While steps have been implemented to cool mortgage demand, particularly from investors in Sydney and Melbourne, the data points to the fact that demand is unquestionably, very strong.</p>
<p>“Clearly with interest rates remaining at close to historic lows, further changes will be required in order to slow mortgage demand and dampen the increases in dwelling values being experienced in Sydney and Melbourne.” </p>
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jonathanchancellor-7SQnKwU6yx

New South Wales, Victoria lead capital city dwelling value increase: CoreLogic

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<p>GUEST OBSERVER</p>
<p class="p1"><span class="s1">Australian housing finance approvals to owner occupiers edged up 0.4 percent in Dec, slightly softer than the 1 percent gain expected but with the detail mostly positive.</span></p>
<p class="p1"><span class="s1">Nov’s 0.9 percent gain was tweaked up to 1.3 percent and the number of loans ex refi (“new loans”) posted a solid 2.4 percent gain to be up 0.9 percent/yr.</span></p>
<p class="p1"><span class="s1">Construction-related loans were flat but loans for the purchase of newly built dwellings rose 3.2 percent to be up 11.9 percent/yr – the gain reflecting settlements on ‘off the plan’ purchases of apartments now being completed.</span></p>
<p class="p1"><span class="s1">The value of housing finance approvals to investors dipped 1 percent in the month – a bit softer than might have been expected given the wider market’s strong finish to 2016 (centred on Sydney and Melbourne).</span></p>
<p class="p1"><span class="s1">Despite the dip the value of loans to this segment is still up 20 percent on the lows in late 2015.</span></p>
<p class="p1"><span class="s1">Overall, the numbers suggest more of the pick-up in momentum late in 2016 was from owner occupiers although the resurgence in investor activity still looks to be the prime mover.</span></p>
<p class="p1"><span class="s1"><br></span><span class="s2">Details</span><span class="s1"> </span></p>
<p class="p1"><span class="s1">Owner–occupiers (no.)   0.4%mth, –4.4%yr</span></p>
<p class="p1"><span class="s1">– ex-financing (no.)        2.4%mth, 0.9%yr</span></p>
<p class="p2"><span class="s1">Construction of dwellings (no.)               –0.3%mth, –5.8%yr<br> Purchase of newly built dwellings (no.)   3.2%mth, 11.9%yr     </span></p>
<p class="p2"><span class="s1">Value of loans:</span></p>
<p class="p2"><span class="s1">Owner-occupiers ($bn)   1.3%mth, –3.4%yr<br> Investors ($bn)                 –1%mth, 19.9%yr<br> Total ($bn)                         0.4%mth, 4.6%yr<br> Total ex refi ($bn)             0.8%mth, 10.2%yr</span></p>
<p class="p1"><span class="s1">Matthew Hassan is senior economist with <a href="https://www.westpac.com.au/"><span class="s2">Westpac</span></a>.</span></p>
<p class="p2"><span class="s1"> </span></p>
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