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Owner-occupier refinancing hits new record

| Colin Lee
We were recently featured in MPA Magazine, where Colin Lee has provided expert opinion on the property market. You can view it here.

But investor lending volumes a concern, says real estate firm

BREAKING NEWS: ABS has released lending statistics for May, showing a monthly increase in new loan commitments for housing and refinancing. Inspire Realty founder Colin Lee said that the figures showed investor loans had plummeted by 17%, indicating more needed to be done to address future housing demand.

Demand for new housing loans has turned the corner, while owner-occupier refinancing exceeded $14 billion – a new high, the latest ABS figures show.
But while the overall figures show a monthly jump in new loan commitments for housing and external refinancing, property investor adviser and Inspire Realty founder Colin Lee said that dwindling loan volumes to investors was a concern.

ABS lending indicators for May, released on Monday morning, show new loan commitments for housing were up 4.8% over the month (down 20.5% year-on-year), at $24.9bn.

The value of external refinancing came in at $21bn ($20.9bn), up 8.1% over the month and up 22.4% year-on-year.

Over the May month, lending to owner-occupiers was $16.4bn, up 4% over the month (down 20.2% over the year).

New lending to investors was $8.5bn, up 6.2% over the month (down 20.9% over the year).

The May figures represent an overall bounce-back after new loan commitments for housing fell 2.9% in April to $23.3bn, while external refinancing fell 9.2% to $19.3bn. They follow new loan commitments for housing of $24bn and external refinancing of $21.2bn in March.

ABS head of finance statistics Mish Tan said that borrowers continued to switch lenders amid an environment of increasing interest rates.

“The value of new owner-occupier housing loan refinances between lenders rose 8.6% and reached a new high of $14.1 billion,” ABS head of finance statistics Mish Tan said.

Commenting specifically on lending to investors, Lee said that ABS figures showed investor loans across the nation had plummeted 17% (from 20,541 to 16,900), indicating everyday Australians were “fleeing real estate”.

Unless action is taken to address rental undersupply, homelessness would continue, he said.

“What’s most disturbing is the lead in time for adding new housing supply to the market is years, not months. As such, we need to make decisions now to address future demand for housing which is increasing at an exponential rate,” Lee said.

In a five-step solution aimed at increasing housing supply for renters, Lee said that incentives were needed to encourage ‘mum and dad’ investors to put more money into rental housing. Improvements to rent assistance, removing legislation that made investment restrictive and inviting feedback from investors when discussing accommodation solutions were among the other recommendations he provided.

Mortgage adviser and Pink Finance Director Nicole Cannon told MPA in June that the previous month’s figures were in line with what was happening within her business, noting that April tended to reflect lower volumes due to public and school holidays.

According to ABS May data, lending to first home buyers reached $14 billion, up 5.5% over the month, down 15.1% year-on-year.
Personal fixed term loans rose 4.3% over the month, totalling $2.2bn.

New loans for business construction fell 19.4% (up 1.6% in trend terms), while business purchase of property rose 8.1% (also up 1.6% in trend terms), ABS noting that these were a volatile series.

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