Mortgage approvals down 6.1% in May
(14 July 2015 – Australia) New home loans approvals have dropped 6.1 percent to 50,366 in May as the Australian Prudential Regulation Authority (APRA) cracks down on risky mortgage lending.
The new data, from the Australian Bureau of Statistics (ABS) was much lower than market expectations, especially on the back of lower interest rates.
ANZ senior economist David Cannington said greater scrutiny of lending practices by APRA, including examining lenders books may have been a key factor in the decrease of approvals.
The crackdown came after a surge in investors entering the housing market drove a second year of double digit home price growth.
Cannington said the data coincided with reports of banks tightening housing investor lending conditions in May, including removing investor interest rate discounts.
"While this will have had some impact on investor lending in the month, we think the full effect of these changes are likely to take some months to impact on investor housing finance."
Cannington said housing finance demand may ease only a little, because record low interest rates and solid home price gains will continue to attract investors.
The value of total housing finance fell 4.4 percent in May, with investor housing loans down 3.2 percent and owner occupied housing down 5.3 percent.
The May results show the first fall in four months and the smallest amount of approvals since August 2013.
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