The clampdown on investor loans is beginning to take effect, as one of Australia’s biggest aggregators, AFG, posted a significant drop in loans to investors over June.
According to the aggregator’s June lending data, there was a significant cooling for investment loans – down to 36.9% nationally, from a peak of 43.1% in April. The last time overall investment loans were at similar levels was July 2013, when they comprised 35.9% of all mortgages processed.
The most significant drop in investor loans – to APRA’s delight no doubt – was in New South Wales. Across the state, loans to investors fell by over 8%, from 49.8% in May to 41.6% in June. Investment loans had been running at an average of 49.5% of all loans in NSW for the previous 12 months.
Elsewhere in Australia, the same moderating trend was repeated, with investment loans declining in SA from 41.8% to 36.8%, in QLD from 36.1% to 34.1%, in VIC from 36.5% to 35.7% and in WA from 31.8% to 31.2%.
Whilst there was a significant cooling in the investor market, Brett McKeon, AFG’s managing director says the overall mortgage market remains buoyant.
“These figures suggest that APRA controls are starting to take effect, but not at the expense of the overall mortgage market. If this trend continues, it should help allay concerns about overheating in Sydney, in particular, as investment levels there come back into line with the sustainable, long term, national average.”
AFG’s Mortgage Index also shows that non-major lenders are making further headway as they compete for greater market share.
Last month saw 30.9% of all mortgages processed for non-major lenders – the highest such figure since December 2014. They are strongest in winning refinance loans (34.8% of all new loans) and weakest at competing for investors, where the major lenders still dominate with 75.5% of all new home loans.
Of new borrowers, 14.2% opted for a fixed rate mortgage last month, compared to 15.2% in May, with 76% of borrowers choosing a standard or basic variable home loan.