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INVESTORS are dominating home lending demand at ???????-unprecedented levels as the central bank strives to cool the property market ???????-without shattering confidence in more fragile sectors of the economy.

Buoyed by record low interest rates, investors have looked through a flat September for property prices and the prospect of tighter lending measures to snap up more than half the new loans signed during the month.

The total number of home loans approved in September slipped 0.7 per cent, seasonally adjusted, to 51,465 as property prices across the major capitals barely moved.

But the value of that finance climbed 2.3 per cent to $28.87 billion, with finance for investment housing up 3.7 per cent to a record $11.94 billion.

By comparison, the value of loans for owner occupiers climbed just 1.4 per cent, to $16.93 billion.

Excluding the value of refinanced credit, investors accounted for 50.4 per cent of new loans, the Australian Bureau of Statistics figures showed. It is the first time they have boasted the lion’s share.

First home buyers accounted for 12 per cent of finance, barely up from their record low 11.8 per cent share of the ???????-market a month earlier.

Economists said the rise and rise of the investor highlighted the imbalance in the property market worrying the Reserve Bank. CommSec economist Savanth Sebastian Sebastian said the RBA was yet to succeed in cooling the investment housing market by flagging so-called macroprudential measures – such as forcing banks to hold more capital relative to the amount they lend to investors.

‘It’s almost seen them (investors) try to effectively jump the gun to beat any possible macroprudential measures,’ he said.

JP Morgan economist Ben Jarman said the property boom, which had been largely centred on Melbourne and Sydney, had seen owner-???????-occupiers lose some of their appetite to pursue their next dream home.

‘Equally, credit growth is still relatively low compared to what prices are doing, so that should start to rein in property prices even before we see what the RBA will do,’ he said.

The RBA and the banking regulator, the Australian Prudential Regulation Authority, are within weeks expected to reveal measures to help cool the stronger segments of the housing market.

These could involve tightening the types of loans offered to investors, or increasing the serviceability buffers – which test a borrower’s capacity to meet ???????-repayments at a higher interest rate – on certain loans.


Posted by Paul Gilder – Herald Sun on 11th November, 2014