Mortgage lending falls in November despite October rate cut: ABS

The number of owner occupier housing loans taken out in November fell 0.5% to 46,199 driven by a drop in first-home buyers taking out mortgages, according to the latest seasonally-adjusted ABS statistics.

This was below market expectations of a 0.5% rise and despite the cash rate falling from 3.5% to 3.25% on October 3 - an indication that lower rates are not encouraging borrowers to take on new debt.

The biggest fall was recorded in South Australia where the number of owner occupier loan commitments fell by 6% followed by Tasmania (-3.3%), NSW (-2.7%) and Queensland (-1%).

Gains were led by the ACT (+3.5%), followed by the Northern Territory (2.3%), Western Australia (1.1%) and Victoria (0.9%).

The national fall in November follows four consecutive months of growth in the number of owner-occupier mortgage commitments.

In October there was a 0.1% rise in the number of owner-occupier home loan commitments, following a  0.9% rise in September and a 1.8% rise August.

Westpac points that excluding refinancing, new lending declined by 1.3% in the month with the headline result "driven by a sharp pull back in the first-home buyer (FHB) market.

In original terms, the number of first-home buyer commitments as a percentage of total owner occupied housing finance commitments fell to 15.8% in November 2012 from 18.7% in October 2012.

"We estimate that lending to FHBs fell 16.7% in November, following a 2.9% fall in October. Lending to FHBs jumped 19% in the six months to September," says Westpac.

"Beyond these timing distortions, the FHB market is expected to advance in response to improved housing affordability associated with lower interest rates.

Westpac also notes that the upgrader market improved in November, with lending up 4.5% in the month and 10.4% higher over the four months to November.

And while there was a 3.3% in lending to investors in November. over the most recent three months lending to this sector is up 11.7%.

The number of loans to buy or build new homes both fell over November, indicating continued weakness in this sector.

Loans for the purchase of new dwellings fell a noticeable 10.3% over November to 2,380 while the number of construction loans fell 1.8% to 4,809.

In value terms, the aggregate value of owner occupier mortgages taken out in November rose by 0.6% to $13.94 billion.

The value of fixed interest investment house loans fell by 3.3% over November to $7.52 billion with taking the value of owner occupier and investment lending down 0.8% for the month to $21.46 billion.

In seasonally adjusted terms, the total value of dwelling finance commitments excluding alterations and additions fell 0.8%.