New mortgage lending to owner occupiers was down in July, the second month in a row this segment of the housing finance market has contracted. Meanwhile, external refinancing was the highest it has ever been.
According to the latest Australian Bureau of Statistics data, the value of new housing finance commitments for owner occupiers fell 0.4 per cent in July, compared with the previous month.
New housing finance commitments for investors rose 1.8 per cent.
Overall, new mortgage lending rose 0.2 per cent in the month. Over the 12 months to July, new mortgage lending rose 68.2 per cent.
Lending to first home buyers was down 7.6 per cent in July.
The ABS said part of the reason for the fall in new lending to owner occupiers over the past two months is the impact of the closure of the HomeBuilder grant scheme in April, which has hit demand for construction loans.
While new lending was subdued, the ABS said external mortgage refinancing (refinancing with a different lender) reached an all-time high of A$17.2 billion, rising 6 per cent in July. This compares with $32.1 billion of new lending.
The value of external refinancing rose 60 per cent over the 12 months to July.
The ABS said the level of refinancing provided clear evidence that borrowers were seeking out lower interest rates, particularly for fixed rate loans, and were attracted to cashback offers.
This trend will increase the competitive pressure on lenders.
Reserve Bank data shows lenders’ housing finance balances growing by 0.6 per cent in July and by 5.8 per cent over the 12 months to July.
APRA data shows that the lenders growing ahead of system include Bank Australia (whose mortgage book grew 1.8 per cent in July), Bank of China (2.3 per cent), Bank of Queensland (0.8 per cent), HSBC (0.8 per cent), ING Bank (0.7 per cent), Macquarie Bank (2.3 per cent), MyState Bank (2 per cent) and Teachers Mutual Bank (0.7 per cent).
Among the big banks, ANZ continues to lose share with a 0.4 per cent drop in the value of its book in July, Commonwealth banks grew 0.6 per cent, NAB grew 0.5 per cent and Westpac grew 0.5 per cent.