Australian Loans to Housing Investors Grew At Twice the Rate of Homeowners

The value of loans to housing investors has surged at twice the rate of those to homeowners in August, lifting by 0.8%, or $3.7bn, to $417.1bn.

The figures add weight to the comment by the Reserve Bank of Australia in its financial stability review last week that housing credit has become “unbalanced”.

And they will encourage calls for the RBA to use “macroprudential” tools – rules and regulations – rather than just interest rates to rein in lending and prevent a dangerous boom/bust cycle in the housing market.

The overall amount that Australians owe on mortgages has notched up its fastest annual growth for three and half years. And the rise in investor loan value in the six months to August, 9.9% on an annualised basis, was the fastest since 2007, before the global crisis bit into banks’ ability to lend.

Housing debt rose by $7.7bn or 0.6%, between July and August. That lifted annual growth from 6.5% to 6.7%, its fastest rise since early 2011. Loans to homebuyers rose 0.4%, or $3.7bn, to $918.8bn.

The figures from the RBA on Tuesday don’t include cross-border lending, such as loans made by the offshore branches of Australian banks to buy properties in Australia.

Other measures of credit in the RBA’s figures were more subdued. Credit to businesses, aside from residential property loans, was unchanged in August, with annual growth of 3.2% barely beating consumer prices.

And other lending to households, which includes loans to buy shares as well as traditional consumer spending, was up only 0.2%, with annual growth at 1.1%.

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza