By Martin North, cross-posted from the Digital Finance Analytics Blog
Continuing our analysis of the ABS April 2014 lending data, it is worth looking at the overall housing finance data. Total lent, including owner occupied and investment secured lending, refinance, and unsecured was $28.3 billion, a record. The previous highest was $28.0 billion in February (both figures are seasonally adjusted).
Looking at the percentage splits, in April, 33% went to secured finance of existing dwellings, 32.5% on investment housing by individuals, 17.3% on refinancing and 6.1% on finance for owner occupied construction. On the investment side, 3.4% went to investment housing purchases by other entities, including companies and self-managed superannuation, and 2.86% went to investment housing construction.
The long term percentage mix from 2000 onwards shows the inroads investment lending is making into the overall portfolio.
We can also show this by looking at the percentage relating to investment lending as a percentage of all housing lending, currently at 38.8%. This is a high.
We still hold the view the current policy settings are wrong. Too much lending is pouring into an inflated housing sector. Interest rates are too low. The banks are lending too freely, and benefiting from inflated balance sheets and profits as a result. Households have more debt than ever. The IMF is right.
