This is the strongest “burst of activity” in four years
The mortgage lending market is growing robustly according to the Reserve Bank’s latest figures, which recorded a $1.1 billion rise in lending year on year in December, the fourth such increase in a row and the strongest burst of activity in four years.
Reserve Bank figures also showed a substantial rise in investor lending, which went up to $1.29 billion in December 2019 from $949 million in December 2018. First home buyer lending is going strong, with $1.2 billion borrowed in December 2019 compared to $924 million the previous year. Owner-occupier lending was also slightly up on 2018.
High-LVR lending was the highest on record since 2014, reaching $724 million, meaning banks are becoming more comfortable accepting high-LVR loans and making use of the speed limits set by the Reserve Bank.
Senior economist Kelvin Davidson says that while lending is showing good momentum, lenders are also “well below” their LVR speed limits, so the growth is not going beyond what is responsible.
“This is ‘responsible’ growth, with the easing of the banks’ internal serviceability tests, which started in late August, likely to still be playing a key role in boosting demand,” Davidson said.
“The latest figures from the Reserve Bank showed that mortgage activity had another bumper month to end 2019, with the figure of $6.5bn of gross new lending in December more than $1.1bn higher than the same month a year earlier.
“In fact, the year on year rise in activity has been at least $500m for four months in a row now – such a strong run of growth hasn’t been seen since late 2015.”
