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Australian investor lending posts record quarterly fall as mortgage arrears rise
New lending to Australian property investors fell by nearly a third in the September quarter, the sharpest quarterly decline in records dating back to 2002. The drop coincided with higher interest rates, falling property prices and new tax rules for investors, while arrears among Commonwealth Bank mortgage customers rose to their highest level in 12 years.
The ABS said investor loan values fell almost twice as much as in the previous record quarterly decline. Lending to owner-occupiers fell 5.3%, first-home-buyer lending dropped 8.6%, and loans to investors building homes were down 12%; overall new lending fell 15%. Analysts said mortgage arrears were rising across banks but remained low, and the government and Coalition disagreed over whether the tax changes would help first-home buyers or deter investment.
In short
- Investor lending fell by nearly a third in the September quarter.
- CBA mortgage arrears reached a 12-year high.
- First-home-buyer lending fell 8.6%.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Supporters of the tax changes can argue that reducing investor advantages may ease competition for homes and improve first-home buyers’ chances of entering the market. The fall in investor lending could reflect a needed shift towards owner-occupiers, while rising arrears make it important to scrutinise policies that might encourage households to take on more debt.
The case against
Critics can argue that discouraging property investment may reduce the supply of rental homes and make housing harder to find or afford, without ensuring first-home buyers can purchase. The steep drop in investor lending, alongside declines in other lending, may also signal broader affordability and financing pressures that tax changes could intensify.
Explained simply
Australia’s housing market is financed largely through mortgages, with loans taken out either by people buying a home to live in or by investors buying property to rent out. The Australian Bureau of Statistics tracks the value of new home loans, while mortgage arrears measure payments that borrowers have fallen behind on.
The Commonwealth Bank is one of Australia’s largest banks, and its arrears figures offer one indication of how some borrowers are managing repayments. Interest rates affect the cost of mortgages, while tax rules can change the costs and returns of owning an investment property.
Changes in investor borrowing can affect demand for homes and the supply of rental properties. The debate over tax changes reflects competing aims: helping people buy their first home and maintaining investment in housing.
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Originally published by The Guardian as “Lending to property investors falls at record pace, as Australians fall behind on home loans”.