First-time buyers lift October mortgage lending figures: ABS

First-time buyers lift October mortgage lending figures: ABS
First-time buyers lift October mortgage lending figures: ABS

First-time buyers helped lift mortgage lending in October, according to housing finance figures released today by the ABS.

It was the fourth straight month of increases, but the pace of growth has slowed.

Nationally, the total number of owner-occupier housing finance commitments increased by 0.7% on a seasonally adjusted basis, with lenders agreeing to finance 51,981 mortgages.

The bright spot in the figures was the return of first-home buyers, which increased as a percentage of the market from 16.4% to 17.9%, with an average loan size of $280,000.

Some first-time buyers make their first purchase an investment property.

Mortgage lending increased in NSW (total number of mortgages up 1.3%), Western Australia (1.3%) and the Northern Territory (4.3%) but declined in all the other states and territories, led by the ACT (down 4.2%).

The number of mortgage commitments declined by 1.6% in both Queensland and Victoria and fell by 1.3% in South Australia.

In value terms and excluding alterations and additions, the market declined 2.5% in October to $20.46 billion, with owner-occupier mortgages decreasing by 1.2% to $14.4 billion and fixed loans for investment purposes down 5.5% over the month to just over $6 billion.

The number of loans for the construction of new houses fell by 1.7% to 4,646.

Banks increased their mortgage lending to owner-occupiers by 0.7% in October while non-bank lending decreased by 0.2%.

The weak October figures follow a 2.2% seasonally adjusted increase in September to 51,821 mortgages.

The overall 0.7% growth in October was “a touch above” expectations of Westpac and market forecasts.

Westpac described the data as mixed with new lending (excluding refinancing) stronger than the headline figure, rising 2.0%

However, new lending for the year to date is still down, declining by 1.8%.

“By state, there was a divide for the month. Victoria and Queensland weakened, both down by 1.6%. 

“The Victorian market is being weighed down by a sizeable increase of supply coming onto the market

“The Queensland market has weakened during 2011, with finance to owner-occupiers down by -11% for the year to date, the weakest of the states.

“These figures provide a snap shot of housing finance just ahead of the RBA's rate cuts. The November and December rate cuts, and our expectation that the RBA will lower rates by a further 50bps, will provide some support to the sector. However, upside will be capped by ongoing headwinds facing the sector.”

The Housing Industry Association (HIA) also described the October figures as a “mixed bag” and says there is a clear need for policy reforms on the new home building front.

“The update for October 2011 showed a weaker result for new home lending for both owner occupiers and investors, together with further modest improvement in aggregate lending for first time and trade-up owner occupiers,” said HIA chief economist, Harley Dale.

“New home lending appears to have largely flattened out through 2011, but at levels below the decade average,” says Dale.

A bounce in mortgage lending is expected in November with figures released by mortgage broker AFG (six weeks ahead of the ABS) revealing loan approvals surging to a 33-month high following the November rate cut, led by a jump in loans taken out by property investors.

AFG recorded an 18.4% increase in mortgages processed by its 2,000 brokers with property investors accounting for almost two out of every five mortgages sold in November (38.4%) – an all-time record for the AFG Mortgage Index.

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Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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