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Australian owner-occupier lending rises in September, may exert upward pressure on household debt

Australian owner-occupiers continued to drive housing finance demand up. On a sequential basis, owner-occupier lending grew 3.2 percent in September ex refinancing. This is the fourth straight monthly solid result. On a year-on-year basis, it rose 5.6 percent, the first positive result since mid-2018. Today’s print indicates that rate cuts an regulatory easing are continuing to flow through to demand.

Sequentially, investor lending dropped 4 percent in September ex-refinancing. Nevertheless, this followed a 6.5 percent rise in the prior month, the strongest result in three years. Annual growth in investor lending is still down, although not as much as earlier in the year.

Increasing prices and demand are driving average loan sizes up and putting upward pressure on household debt, noted ANZ in a research report. The sharp rebound in mortgage demand is a worry for the RBA, which requires to balance the potential stimulatory effects of further rate cuts with risks to financial stability.

“Housing is responding much more sharply to recent rate cuts than either household spending or business conditions. The resultant upward pressure to our already high household debt weighs on household spending and may make Australian households more vulnerable to an economic shock”, added ANZ.

By Aditi Awati
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