Lending for housing continued to rise in February, but in a way that’s likely to please the Reserve Bank of Australia.
The value of finance approvals by banks and other lenders rose by 2.9 per cent or $775 million to $27.6 billion February.
The gain between January and February lifted the total value of loans by $5.5 billion or 24 per cent from a year earlier, according to the seasonally adjusted figures from the Australian Bureau of Statistics on Wednesday.
The latest rise followed two months when approvals appeared to have flattened out after three big steps up in September, October and November.
The renewed strength will most likely rekindle concerns about the potential for the booming housing market to go bust, generating strains in the banking system and weakening the economy.
But the pattern within the lending was encouraging.
The RBA has been pinning its hopes on the housing construction sector to figure highly in the so-called “rebalancing” of the economy.
The mining investment boom is past its prime and it’s hoped that other sectors will grow faster to pick up the slack it leaves.
The latest housing finance figures suggest the central bank’s prayers are being answered.
Two thirds of the rise in February was accounted for by a surge in loans to investors to build new housing. (The rest was refinancing of existing home loans.)
So the rise in lending in February will be largely directed toward new building – just what the RBA wants.
And it’s not just the kind of one-off blip often seen in the volatile investor finance category.
On average over the past six months, lending for new housing – new and to-be-built, investors and home-buyers – has been running at $360 million a month more than in the preceding six months.
That new supply, once it’s built, should also help take the edge of price rises.
No-one, least of all the RBA, has promised the rebalancing will be a seamless affair.
But the pattern of housing finance offers some reasonable hope that things won’t turn out too badly.