Investor activity is playing a significant role in driving the growth of the housing lending market. In September 2023, the Australian Bureau of Statistics (ABS) revealed that the value of new investor loan commitments for housing increased by 2% to reach $9 billion, marking a 2.6% growth compared to the same period the previous year.

Mish Tan, the head of finance statistics at ABS, pointed out that investor loans are outpacing owner-occupier loans in terms of growth. This trend has been ongoing since February 2023. However, it's important to note that the total value of new housing loan commitments has not yet reached the all-time highs seen during the COVID-19 pandemic.

The ABS data also indicates that new investor loan commitments increased in most states and territories, with significant growth in Victoria and New South Wales at $127 million and $77 million, respectively.

Economists are noting that the upturn in investor lending aligns with the rebound in property prices since February. Property prices have risen by 8.9% since their low point in February, while investor lending has increased by 13% during the same period.

Despite this, investor lending remains below its pandemic peak, down by 2.2%. Home prices, on the other hand, have returned to their previous peak, suggesting a shift in the typical relationship between new lending and home prices.

Nationally, home prices reached new records in October, with PropTrack's Home Price Index rising by 0.36% month-on-month, resulting in a 4.39% increase over the year. Similarly, CoreLogic's Home Value Index (HVI) increased by 0.9% in October, with the national HVI standing just half a percent below the historic highs recorded in April 2022.

Wu also highlighted an increase in new loan commitments for purchasing existing dwellings, along with a rise in investors purchasing residential land.

In summary, the total value of housing loans rose by 0.6% to $25 billion, following a 2.4% increase in August, although it remains 4.7% lower compared to September 2022. On the other hand, new loan commitments for owner-occupier housing fell by 0.1% to $16.1 billion and were 8.4% lower compared to a year ago.

Additionally, the value of external refinancing saw a decline for the second consecutive month. There was a 7.8% decrease in total housing, an 8.4% decrease for owner-occupier housing, and a 6.4% decrease for investor housing.

The refinance activity that saw a substantial boom throughout 2023 is finally subsiding, with a 14% drop over the last two months. This decline comes after approximately $310 billion of loans were refinanced since May, representing around 15% of all outstanding loans.