Housing finance on the rise excepting for first home buyers

Home loans jumped in February by the highest level in 14 months, the Australian Bureau of Statistics said with lending activity slowly moving higher.

Adding to the signals that near-record low interest rates are underpinning the property market, the number of dwelling loans rose 2% from January.

It concluded a four-month run of declining approvals. 

Fixed rate loans rose from 12.2 per cent of all loans to 13.5% in February and the average home loan across Australia stood at $298,500 in February, up 3.6% on a year ago.

Loans to owner?occupiers rose by 2.0% in February which was slightly above market expectations of a 1.5% increase.

Housing Industry Association chief economist Harley Dale said housing finance outcomes presented a mixed bag of results in the month of February 2013, but overall the changes had been in the right direction.

“We’re still not firmly on the path back to the healthy levels of new home lending which would be consistent with the strong residential construction recovery the economy and population requires,” he said.

Source: HIA

Westpac noted that after a patchy fourth quarter and a weak start to 2013, finance approvals posted a better result in February.

It also noted January's 1.5% decline was revised to just a 0.3% dip.

"The detail was mostly positive as well, the main exception being around first home buyers," it noted with changes in state government support for first home buyers and the end of an associated pull forward in demand still having a marked impact.

"The main weak spot was still around first home buyers with the number of loans to this segment slipping a further 1.5% in February to a new cycle low.

"We estimate it is the lowest seasonally adjusted read since March 2004," Westpac noted.

It said that overall the data concurred with recent auction and price data suggesting the housing market recovery quickened in early 2013.

But Westpac warned the gains were being driven by upgraders and investors with first home buyer activity very subdued.

"If this pattern continues, overall momentum may fade particularly for upgraders," Westpac suggested.

The state by state detail showed a broad-based rise across the big states: NSW +2.2%, Victoria +1.7%, Qld +4%mth, and WA +2.1%. But SA was down 2.9%.

CBA noted while overall lending activity was moving upwards, FHB activity has "collapsed" over recent months.

"FHB’s made up only around 14.4% of the market which is the lowest level since June 2004," CBA noted.