Owner occupiers grow share of housing credit – first timers up strongly

Housing markets roll through regular cycles, and one of the latest is that investors are leaving the housing finance scene, leaving space for owner-occupiers and especially first home-buyers to take up a more substantial role. They now represent just short of one-fifth of loans issued and accounted for 13.3% of the total value in June 2018.

The chart below shows the value of loans to Owner-Occupiers on the one hand and to Investors on the other. In June 2018, loans to investors fell to AUD10.382 billion, their lowest level since August 2013. Revised lending practices and regulatory pressures are having an impact.


To go straight to the dashboard and take a closer look at the data, click here.

Over the same period, loans to Owner-Occupiers have continued on, more or less unabated, for more than a year. At AUD14.774 billion in June 2018, they were less than AUD400 million below their peak recorded in May 2017. Of course, overall that means that total housing finance credit commitments are declining, but not perhaps as quickly as had been anticipated.

One of the more pleasing aspects of the current housing market is the opportunities that have been created for first home buyers. As the chart below demonstrates, they have been provided the space in a market where there is only ‘so much’ capital available to lend, to grow their share of total loans. But more importantly, the total value of loans to first timers has grown sharply as market prices ease and affordability improves. What that means is more people and families are getting into the market.


To go straight to the dashboard and take a closer look at the data, click here.

Increasing the debt spread of the nation – more households holding a share of the nation’s housing loan book – is a very good thing, in an economy concerned about debt. Almost as much so as the decline in total credit for new dwellings.

AUD20.8 billion worth of housing finance commitments were made to owner-occupiers in June, the lowest it has been since October 2017.  

Though the value of loans issued to owner-occupiers fell as a share of total lending, owner-occupiers accounted for 66.8% of commitments over the month, their greatest share since January 2012.  

Loans to first home buyers were down 7.4% in June 2018 compared to the prior month, but their share of total owner-occupier loans is now up to 18.1%, the highest since October 2012.

It is not all good news for firsties, largely because, as Core Logic’s Cameron Kusher puts it:

“Along with the increasing share of commitments going to first home buyers, owner occupier first home buyers are increasingly borrowing larger sums to enter into the market.  As at June 2018 the average loan size for a first home buyer was $349,800 which was both an historic high and 10.1% higher year-on-year.”

The evident caution in the total market – including from lenders – is not apparently filtering through to those seeking to buy their own homes. They would do well to consider their positions carefully before they engage in the honourable obsession of committing to a housing loan.