Steep Decline In Mortgage Lending



Is this the effect of Winter, interest rates rises, the elections

or the end of the bubble?

High-LVR lending on rise again, but overall home lending in steep decline
on Monday 28 July 2014
Housing loans above the 80% loan:value ratio jumped by $75 million in May and by another $30 million in June, but a Reserve Bank survey of overall residential lending shows it declined more sharply in July.

The overall housing loan approvals survey, still in its experimental stage, is done weekly on a rolling 13-week basis. It shows just over 7000 approvals in the 13 weeks to 20 July 2012, dropping by 300 a year later, then another fall to 5700 to 18 April this year.

Excluding 2 short weeks with very low figures, quarterly approvals were above 6000 until the last week of June. Since then, quarterly approvals have been below 6000, falling to 5464 in the 13 weeks to 18 July.

A comparison with the same 13 weeks last year shows the number of approvals down 7.3% in mid-April, and a steadily reducing lending rate since then. The reduction was by 17.5% in the quarter to 11 July, 17.1% to 18 July.

Comparing whole years on a rolling weekly basis, the Reserve Bank figures show a 5.8% decline in mid-April, and that decline steadily growing to reach a 9.4% difference at 18 July.

The value of approvals, $1.07 billion for the 13 weeks to 18 April, was above $1.1 billion for all but the quarters ending in the 2 holiday weeks, but dipped to $996 million in the 18 July week. The difference between this year and the same 13 weeks of 2013 has grown from a 7.3% decline in mid-April to a 12% decline at 18 July. Comparing the whole year against the previous year, the decline has gone from 2.9% in April to 6.5% at 18 July.

New loan commitments above the 80% loan:value ratio (LVR) were halved in the first month they were introduced, last October, from $1.187 billion in September to $585 million. They declined sharply every month, down to $147 million in January, but have since been rising, to $358 million in June.

High-LVR loans made up 25.1% of the total in September 2013, were cut to 12.8% in October and fell to 4.8% in January & March. They’ve since risen to 8% of all loans. After construction-lending exemptions, the high-LVR share of mortgages fell from 11.5% last October to 3.6% in January & March, but has steadily risen in the last 3 months to reach 6.7% in June.\(



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