Housing investment slowdown has arrived: Cameron Kusher

Housing investment slowdown has arrived: Cameron Kusher
Housing investment slowdown has arrived: Cameron Kusher

The mortgage rate lift is starting to be felt, driven largely by Australian mortgage lenders rationing credit to the investor segment, according to CoreLogic's Cameron Kusher.

He said the mortgage rate premium for investors appears to finally be biting into the market with weakness in both total investor credit and investor housing finance commitments.

"April 2017 lending aggregates data from the Reserve Bank (RBA) showed that investor credit rose by 0.55 percent over the month, its lowest monthly increase since August 2016," he said.

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Housing investment slowdown has arrived: Cameron Kusher

"At the same time, April 2017 housing finance data shows there was $12.6 billion in investor housing finance commitments over the month, the lowest value since September 2016.

"Since August and September of last year, standard variable mortgage rates for investors rose by 30 basis points compared to a 5 basis point increase for owner occupiers.

“There are individual states and territories in where a slowdown in mortgage demand by investors will have more of an impact, namely New South Wales and Victoria.

“Tasmania is the only state or territory where the value of lending to housing investors is currently rising however, in terms of the value of lending to investors, New South Wales and Victoria account for a substantial majority of overall lending.

“This is partly a function of higher housing costs in these two states, nevertheless, New South Wales accounted for 49.3 percent of all investor lending nationally in April 2017 with Victoria accounting for 27.4 percent.

“A pull- back in lending to investors is inherently likely to have more of an impact on the New South Wales (Sydney) and Victorian (Melbourne) housing markets.”

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Housing investment slowdown has arrived: Cameron Kusher

"The potential impact on the New South Wales and Victorian housing markets of investor slowdown is further highlighted by the fact that, excluding refinances (which are also trending lower), investors accounted for 55.3 percent of mortgage demand in New South Wales in April 2017 and 46.8 percent in Victoria.

"In all other states and territories, investors accounted for less than 40 percent of mortgage demand in April 2017, with the proportion trending lower over recent months in most regions.

“We anticipate that investor demand will continue to slow over the coming months.

“We’re seeing lenders re-price mortgage rates for investors and, we are yet to see the full impact of the policy changes designed to slow the level of interest-only lending.”

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Housing investment slowdown has arrived: Cameron Kusher

"With investor demand likely to fade further, this will also contribute to a further slowing of the rate of value growth in the Sydney and Melbourne housing markets where investor demand has been significantly greater than it has been elsewhere.

“A reduction in the pace of capital gains will add further disincentive to investors.

"We can assume most investors are focussed on the prospects for capital growth and relying on a negative gearing strategy to offset the cash flow losses.”

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Housing investment slowdown has arrived: Cameron Kusher

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Cameron Kusher Mortgage Lending

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