Despite economist forecasts of multiple cash rate hikes this year, new investor housing loans figures hit record highs in January.

The ABS figures were published ahead of Reserve Bank governor Phillip Lowe’s word of caution on Tuesday that lending standards must be maintained.

“Housing prices have risen strongly, although the rate of increase has eased in some cities,” Lowe said.

“With interest rates at historically low levels, it is important that lending standards are maintained and that borrowers have adequate buffers.”

The Reserve Bank will also continue monitoring for inflationary pressures and  maintaining the cash rate target at 10 basis points.

New investor loan commitments have grown by 6.1 per cent to a seasonally adjusted $11 billion.

The new investors figure also pushed the total housing loan commitments value up 2.6 per cent to a record $33.7 billion in January.

Records were also set in December 2021 as reported in the February 2022 ABS data.

ABS head of finance and wealth Katherine Keenan said the value of the investor loan commitments had grown as had the share of owner-occupier commitments.

“The value of new loan commitments for investor housing has grown for 15 consecutive months, consistent with the strong housing market and growth in house prices,” Keenan said.

“Despite record investor loan commitments, the share of investor lending to all new housing loan commitments was around a third. This reflects the rapid growth of owner-occupier commitments over the past 18 months.”

The ACT drove the rise in investor loan commitments with a 22.8 per cent increase. Victoria and NSW followed at 11.1 and 9.8 per cent respectively. Queensland’s investor loan commitments fell by 1.7 per cent but are still historically high.

Westpac senior economist Matthew Hassan said it was interesting to see how big a share investor loans took up in each state.

“Investor loans make up a much higher share in SA, accounting for just over half of loans by value versus 30 to 35 per cent in most other states and just 22 per cent in WA,” Hassan said.

New owner-occupiers still account for around two thirds of the housing loan commitments and recorded increases of 1.1 per cent to $22.7 billion.

Owner-occupier loan commitment growth was highest in the ACT at 33.5 per cent, NSW at 3.3 per cent and Victoria at 3.2 per cent.

Hassan said decreases in other types of loans accounted for the small increase month-to-month for owner-occupiers.

“The main undershoot was around owner-occupier loans, which rose just 1 per cent over the month,” Hassan said.

“The detail shows a notable drag from construction-related loans, down 3.6 per cent over the month, and loans to first home buyers, down –5 per cent over the month but ‘upgraders’ were up 2.9 per cent.”

First home buyer loan commitments however, fell 6.9 per cent in January, a 32.6 per cent decrease on the same period last year.

Almost all states and territories recorded falls in first home buyer loan commitments with the ACT recording the only increase, 25.7 per cent, and Queensland and Western Australia down by 16.1 and 8.1 per cent respectively.

The average first home buyer loan is now $491,000.

Nationally, the average loan size for owner-occupier housing rose $17,000 to a record of $619,000 in January, Keenan said.

“The strong rise in the average loan size for owner-occupier dwellings in January was due to an increase in the value of commitments, and a largely unchanged number of new loan commitments,” Keenan said.

“All states and territories rose to new highs except Tasmania and the Northern Territory.”

The increase in loan size may create problems down the road, CommSec chief executive Craig James said.

“The average new mortgage on an owner-occupier established home continues to grow at a double-digit annual rate, the seventh straight month of double-digit gains,” James said.

“Rising debt levels will be tested later in 2022 when rates start to rise.”

AMP Capital’s Shane Oliver said that while the RBA was cautious about the effects of the Ukraine conflict and the east coast flood disaster, indicators may still perform better than expected.

“We remain of the view that jobs, inflation and wages data will come in stronger than the RBA is expecting,” Oliver said.

“The Ukraine conflict has likely added more to the inflation outlook than it will detract from economic activity.

“Likewise, the floods will also add to inflation and while there may be a brief disruption to economic activity in affected areas this will be more than offset by the clean-up and rebuilding.

“Our base case remains that the first RBA cash rate hike will be in August.

“However, the risk is still skewed to an earlier tightening in June.”

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