Investor loan growth ticks higher, owner-occupier loans fall

The volume of new home loans to owner-occupiers has fallen 0.8 per cent month-on-month in October, according to the latest figures from the Bureau of Statistics.

Loans to investors, however, ticked higher by 0.7 per cent, despite the total value of all home loans down 0.2 per cent.

In a note to clients, JP Morgan economist Tom Kennedy said refinancing activity was a major drag, meaning "genuine new loan growth was somewhat better than the headline print would suggest".

"While refinancing activity has buoyed the numbers in the current cycle, the annual run rates for total and ex-refinancing loans have been slowing," wrote JP Morgan economist Tom Kennedy.

"This owes to a string of weak refinancing prints, with the data having contracted in five of the past six months, which suggests some reluctance on the part of banks to facilitate equity withdrawal."

Mortgage Choice, meanwhile, said it was not surprised to see a slight moderation in home loan demand, but noted that total demand still remains strong by historical standards.

"Data from CoreLogic shows property prices across the combined capital cities continue to rise month-on-month, so I wouldn't be surprised to see a lift in the total value of all dwelling commitments," said Mortgage Choice chief executive John Flavell.

"So long as rates remain low and demand continues to outstrip supply, we can expect to see continued growth in property values."

JP Morgan also noted that, even though the RBA has left rates unchanged since August, borrowing rates from lenders have edged higher, while specials have become less prominent.

The share of new loans held by investors has increased more than 4 percentage points since October 2015, and the share of new loan growth to investors has crept higher to being just shy of 39 per cent of total home lending.

Meanwhile, first home buyers continue to make up just 13.7 per cent of new home lending.

JP Morgan said it does not see the current upturn in investor activity as a hurdle to further easing from the Reserve Bank in 2017.