The impacts of lower interest rates and an improvement in banking credit conditions has seen housing finance, both for owner occupiers and investors improve sharply in August.
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Total lending for the month of July was up 2.8% on the previous month with investor loans up 5.6% and owner occupier loans up 1.9%.
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Whilst the monthly increase has seen strong gains on the previous month, lending is still well below the same month of last year with Investor loans still down -13% on last year and owner occupiers down -2%.
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Owner Occupier loans are down about -10% from the peak in August 2017 while Investor loans are down -48% from the peak in April 2015.
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The improvement in lending is a welcome sign to the regulators who have been closely monitoring the recent interest rate reductions as they battle a weakening economy.
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(Repeat) Subject to their being no external shocks, we expect a similar rise in lending over the next 6 months as borrowers return to the real estate market. Tightening supply conditions over the next 6-12 months will then likely lead to above average pricing increases in 2020/2021.
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