Investor lending continues to climb

Investor lending surged again in April, helping to drive home loan commitments to another new high, according to data from the Australian Bureau of Statistics.

The ABS said a record $31 billion worth of home loans were signed in April, with investor lending up 63 per cent on the same time last year to reach $8.05 billion.

Lending for owner-occupiers rose most strongly for existing homes, which rose 0.2 per cent, while first home buyer commitments were down 1.9 per cent.

The biggest rise in home loans occurred in New South Wales, at 8.6 per cent, while the value of loans in Victoria was up 8.4 per cent, the ABS said.

Canstar Group financial services executive Steve Mickenbecker described the return of investors as “relentless”.

“Investors are going head to head with first home buyers at the lower end of the market, which has likely led to the small dip in first home buyers entering the market in April,” Mr Mickenbecker said.

“First home buyers without the confidence to sign unconditional contracts and struggling to put a deposit together, are starting to feel crowded out.” 

Real Estate Institute of Australia president Adrian Kelly noted that the 11th consecutive month of investor lending increases meant it was a good time to sell property. 

“With housing finance figures being a leading indicator of market activity, this suggests a greater interest by buyers during the normally quieter winter months,” Mr Kelly said.

“This makes it a good time for listing, which many owners are doing with an unseasonal increase in listing enquiries. 

“The coming months should see high levels of market activity.” 

Ratecity.com.au research director Sally Tindall said while the increase in investor lending was not as strong in April as compared to March, it was nonetheless an indication of the increased competition at the lower end of the market.

Ms Tindall said many first homebuyers were starting to get squeezed out by cashed-up investors.

“Investor lending is likely to continue to increase as investors surge back into the market in pursuit of capital growth,” Ms Tindall said. 

“Banks are moving quickly to try to cash in on the investor comeback with 41 lenders cutting investor rates in the last two months. 

“Australia has just clocked up six consecutive months of record levels of home lending.  

“The idea that we need to relax responsible lending laws to improve the flow of credit is comical.”