A big concern for investors over the past year has been the slowing home loan market. A slowdown in mortgage lending is bad news for bank earnings and for property prices.
The latest Reserve Bank figures, released on Friday, show that there is indeed a slowdown in progress, particularly in the investor segment of the mortgage market. However, it is not a disaster, with the owner-occupier segment holding up pretty well. A bonus for the banks is that business lending volumes are picking up.
The value of outstanding investor mortgages was unchanged in October, compared with the previous month, and was up just 1.3 per cent over the 12 months to the end of October. That is the lowest annual growth rate recorded in the Reserve Bank’s data series, which goes back to 1990.
The value of owner-occupier mortgage balances was up 0.4 per cent month on month, and up 7 per cent over the 12 months to the end of October. Overall mortgage outstandings were up 0.3 per cent month on month and 5.1 per cent over the 12 months.
The overall rate of growth in mortgage balances is at its lowest level since late 2013.
Business loan outstandings were op 0.6 per cent month on month and up 4.7 per cent year on year. Business lending has picked up this year and the annual rate of growth in balances is at its highest level since late 2016.
Personal credit continues its long decline. The month-on-month change in personal credit balances has been flat or negative since August 2015 and the annual rate of decline is now 1.6 per cent, which is unprecedented.
The overall credit position is not as bad as some commentaries have suggested but it is still not much of a cause for optimism. ANZ issued an economic note saying the decline in mortgage finance growth “is consistent with our view that house prices will continue to decline through 2019.”