Lending activity steadies in February

Could-lending-for-residential-property-be-cooling-down_157_6009098_0_14102476_300After months of concern and speculation about lending activity in the residential property market, the Australian Bureau of Statistics (ABS) has delivered some news that may ease fears about an over heating housing sector. The data shows that the number of people taking out loans for housing steadied over February, which should offer some relief to buyers worrying about skyrocketing values.

According to the results, the total number of dwelling commitments for owner-occupied property rose just 0.2 per cent over the month. The Real Estate Institute of Australia (REIA) pointed out that this is the fifth consecutive month of incremental 0.3 per cent rises, which could reveal the the housing market is beginning to steady. The number of loans for construction and buying a new home fell 1.1 per cent and 1.4 per cent respectively over the month in trend terms, while lending to buy an established home only increased by a moderate 0.5 per cent.

“The February 2015 lending figures indicate a market that is moderating with February being the fifteenth consecutive month of modest drops in lending levels if refinancing is excluded,” REIA President Neville Sanders said.

He also noted that most of the states and territories experienced decreases, though New South Wales, Victoria and Tasmania fell outside this category. NSW recorded the largest gains in lending over the month, with 1.2 per cent more finance commitments taken out in February in New South Wales. This figure was likely helped along by a resurgent Sydney market, driven by investors insatiable taste for capital growth.

However, there are signs that even this segment could be easing back. The value of loans for investment climbed just 0.4 over the month in trend terms, which CoreLogic Analyst Cameron Kusher said could reflect that warnings from the Reserve Bank of Australia are being taken into account.

“We know that APRA are monitoring lending standards closely and they, along with the RBA, are carefully watching the investment segment of the market,” he said in an April 10 blog post.

Buyers can find some comfort with lending activity having eased back, as there could be less upwards pressure on house prices.

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