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Home loan demand drops slightly in February

Home loan demand fell slightly over the month of February, according to new data from the Australian Bureau of Statistics.

April 10, 2017

Home loan demand fell slightly over the month of February, according to new data from the Australian Bureau of Statistics.

The latest Housing Finance data found 54,816 home loans were written throughout the month of February, down from 55,099 written the month prior.

“After three consecutive months of growth in home loan approval numbers, we saw a decrease in February,” Mortgage Choice chief executive officer John Flavell said.

“Of course, today's result isn't surprising. January and December are notoriously strong months in terms of home loan demand and we then tend to see a drop off in home loan approvals come February.

“But while home loan approvals were slightly down in February in comparison to the previous month, they were still strong by historical standards.

“Moreover, the total value of all home loans written was also strong by long-term standards.”

In February 2017, $32.9 billion worth of home loans were approved, down 2.7% on the previous month, but up 0.3% on February 2016.

Of the $32.9 billion worth of home loans approved over the month of February, $19.9 billion were for owner-occupied loans, while $12.9 billion were for investment purposes.

Looking ahead, Mr Flavell said recent investment policy and pricing changes by many of Australia's lenders could cause this type of home loan demand to tumble.

“Over the coming months, we expect to see lending for investment housing to decrease because a lot of Australia's lenders are making changes in this space,” he said.

“In recent weeks, we have seen a number of lenders tweak their investment pricing, with some increasing their interest rates by as much as 39 basis points across some of the investment products.

“In addition, some lenders have removed themselves from the investment lending space altogether, whilst others have tweaked their policy and made it clear that they will only lend to certain types of investor customers.

“All of these changes will ultimately have an impact on the level of investment activity and investment loan approvals.”

According to the data, there was a drop in the number of home loans approved for the purchase of both new and established dwellings, but an increase in the number of loans approved for the construction of new dwellings.

“In February, the volume of loans approved for the construction of new dwellings rose 1.7% to 5,634,” Mr Flavell said.

“However, there was a 7.1% and 0.4% drop in the purchase of new and established dwellings respectively.”

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