The value of Australian home loan lending jumped to the highest level on record in August, driven by a spike in loans to investors.
According to the Australian Bureau of Statistics (ABS), housing finance jumped by 2.1% to $33.9 billion in seasonally adjusted terms, surpassing the previous record peak of $33.75 billion set in January this year.
From a year earlier, the value of total housing finance rose by 8%, up from 3.8% in July.
In what will no doubt raise eyebrows at the Reserve Bank of Australia (RBA) and Australian’s banking regulator, APRA, the value of investor housing finance surged by 4.3% to $12.633 billion over the month.
That was the largest monthly total since March this year, and the greatest in percentage terms since November 2016.
It also left lending to investors up 6.5% from a year earlier, a sharp rebound following flat growth in the 12 months to June.
While only one month’s figures, the rebound casts doubt as to whether attempts to slow down investor activity through tighter macroprudential measures are working.
“APRA data for 2Q showed banks making progress in reducing interest-only loans, though measures to date do not appear sufficient to slow credit growth in line with income growth, per the regulators’ desire,” said Henry St John, economist at JP Morgan.
“The RBA may have more to say about this in tomorrow’s Financial Stability Review,” he says, adding that “the trend in investor lending growth will be closely monitored by the regulators”.
In it’s October monetary policy statement, the RBA noted that “growth in housing debt has been outpacing the slow growth in household incomes for some time”.