Investor loan demand nears record: ABS

Homeowner mortgage demand continued to decline in October, but investors quickly picked up the slack, approaching the all-time high set in April 2015.

Overall, home loans fell 2.5% in October to just under $ 29.6 billion, the Australian Bureau of Statistics said Thursday.

Homeowner loans fell 4.1% to $ 19.8 billion, but investor home loans rose 1.1% to $ 9.7 billion.

“The value of new investor housing loan commitments has increased for 12 consecutive months,” said Katherine Keenan, ABS’s finance and wealth manager.

“While the value of investor loan commitments increased 90% over the past year, the number of investor loans represented only 33% of all new housing loan commitments in October. “

The loan demand came as the Organization for Economic Co-operation and Development warned that the Reserve Bank of Australia may have to raise interest rates earlier than expected amid rising inflation,

In its latest economic outlook, the OECD said the central bank should be vigilant for signs of rising inflation, forecasting core inflation could reach 2.4% in 2022.

“(She) may have to harden her policy faster than she expected,” the Paris-based institution said.

The RBA doesn’t expect inflation to hit the middle of its 2-3% inflation target until 2023, and still believes it may have to wait until 2024 before raising the policy rate.

The OECD expects Australia’s economy to grow 3.8% annually in 2021 and 4.1% in 2022.

The latest national accounts released on Wednesday showed the economy contracted 1.9% in the September quarter due to recent COVID-19 lockdowns, but the annual rate was 3.9%.

The quarterly contraction of 1.9% was the third largest since the introduction of national accounts in 1959, although it was smaller than economists feared.

Treasurer Josh Frydenberg is confident about the outlook, with jobs and retail spending having since rebounded and corporate investment intentions particularly strong.

“I look forward to a strong Christmas and a very strong New Year,” Mr. Frydenberg told ABC Radio.

Ghost Treasurer Jim Chalmers is also hoping for a recovery.

“But we can’t be complacent about it because the government has boasted of a recovery before and instead delivered some pretty horrific numbers (Wednesday) in the national accounts,” he told ABC TV. .

Meanwhile, ABS also said Australia’s trade balance shrank to $ 11.2 billion in October, from $ 11.8 billion the month before.

Exports fell 3% due to falling iron ore prices, while imports also fell 3% due to lower imports of capital goods.