Home loan approvals drop in February

by Miklos Bolza11 Apr 2017
The demand for residential home loans fell slightly during the month of February, according to the latest figures from the Australian Bureau of Statistics (ABS).

In its latest housing finance report, the ABS found that 54,816 home loans were written in February – down from the 55,099 written in the previous month.

This comes after three consecutive months of increasing home loan approvals, said Mortgage Choice chief executive officer John Flavell.

“Of course, today’s result isn’t surprising. January and December are notoriously strong months in terms of home loan demand and we then tend to see a drop off in home loan approvals come February,” he said.

“But while home loan approvals were slightly down in February in comparison to the previous month, they were still strong by historical standards.”

Furthermore, the total value of all home loans written was strong, Flavell said. While the $32.9bn worth of home loans approved in February was down 2.7% from January, this was up 0.3% from February last year.

Of the total loans written in February, $19.9bn were for owner-occupiers and $12.9bn were for investors.

Looking at investment housing commitments, the total value increased by 0.7% in February in trend terms and decreased by 5.9% in seasonally adjusted terms, which was down from the 2015 peak, said Malcolm Gunning, president of the Real Estate Institute of Australia (REIA).

“It needs to be remembered that this is before last week’s actions by the regulators and banks to limit bank lending in an attempt to dampen investor demand for property in Sydney and Melbourne,” he said.

“Overall the figures for February 2017 show, in trend terms, that the number of owner-occupied finance commitments increased by 0.3%. If refinancing is excluded, in trend terms, the number of owner-occupied finance commitments increased by increased by 0.8% following a rise of 1.1% in January.”

State-by-state, there were increases in dwelling commitments in all states except Western Australia, Queensland and Tasmania, he said. The Australian Capital Territory had the largest increase of 1% while Western Australia had the largest decrease of 0.8%.

“In trend terms, the number of established dwellings purchase commitments increased by 0.4% while new dwelling construction decreased by 0.1% and the purchase of new dwellings remained flat.”

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