Mortgage lending limps to 0.8% rise in April as FHBs remain on sidelines: ABS

The number of owner-occupier home loan commitments in April lifted by just 0.8% to 48,475 mortgages  (up 6.9% over the past 12 months) with little improvement in first-home buyer participation, according to the latest ABS housing finance figures.

While mortgage broker Loan Market notes this was the highest monthly uptake of home loans since November 2009 and the fifth consecutive month of growth for the "struggling sector" it was significantly below the median forecast of a 2% rise in seasonally-adjusted dwelling commitments to owner occupiers in April based on the views of 26 economists polled by Bloomberg last week.

Westpac's economics team called the latest monthly figures "underwhelming" noting that "although approvals remain broadly consistent with a housing recovery, the strength of the upturn remains disappointing given the low level of interest rates".

"The detail showed loans excluding refinancing were down 0.7% in April although they are stronger in through the year growth terms (up 11.5% for the year vs 6.9% annual growth for total lending).

"Looking by state, NSW, SA and WA continue to lead the recovery with approvals (excluding refinancing) posting strong double-digit annual growth.

"Victoria and Queensland are the laggards with both recording declines in approvals (excluding refinancing) in April," says Westpac.

In value terms, loans to owner occupiers fell 0.9% to $14.6 billion while investment housing fixed loans rose 1.1% in value terms to $8.14 billion - indicating stronger demand for housing from property investors over owner occupiers

The small rise in owner-occupier lending April was driven by demand for establshed homes over new homes.

ABS recorded a 1% rise in loans for established home purchases.

Loans for the construction of new homes lifted just 0.2% while loans for the purchase of new dwellings fell 0.4%.

"Construction-related loan approvals - both loans for construction and for the purchase of newly built dwellings - have been even stronger over the last year and although approvals in this segment were also soft in April, through the year growth is robust at 17.9%," says Westpac.

In original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments rose to 14.3% in April 2013 from 14.2% in March 2013.

"First-home buyers remain the stand out weakspot in the approvals data - we estimate loans to this segment were up 0.7% (seasonally adjusted) in April but are still down 10.8% annually and at very low levels by historical standards, particularly in NSW and Queensland," says Westpac.

Between April 2013 and March 2013, the average loan size for first home buyers fell $2,000 to $289,200. The average loan size for all owner occupied housing commitments rose $700 to $301,800 for the same period.

Owner occupied housing commitments trended up strongest in NSW  (up 279, 2.1%), Western Australia (up 130, 1.8%), Queensland (up 71, 0.8%), Victoria (up 71, 0.6%), South Australia (up 64, 2.0%), the Australian Capital Territory (up 15, 2.0%) and Tasmania (up 1, 0.1%), while a fall was recorded in the Northern Territory (down 10, 2.7%).

The seasonally adjusted estimates rose in South Australia (up 238, 7.6%), Western Australia (up 219, 3.0%), New South Wales (up 209, 1.5%), Queensland (up 116, 1.3%) and Tasmania (up 5, 0.7%), while falls were recorded in Victoria (down 579, 4.4%), the Australian Capital Territory (down 19, 2.5%) and the Northern Territory (down 3, 1.0%).