The growth in new investor lending of 5.4% and 2.9% for owner occupiers (seasonally adjusted) was stronger than the market was expecting in July.
Lending to first home buyers showed a more modest 0.8% monthly rise.
Lending growth in June was revised down to 1% (from 1.3%), suggesting home buyers may be seeing cause for optimism in the new financial year.
Friday's ABS lending data figures take the annual growth in lending to 26.5% overall.
Investor lending has again led growth over the last 12 months, more than a third higher at 35.4% while owner occupier lending is up 21.4%.
First home buyer lending was not far behind at 19.7% for the year.
WA leads investor growth
The value of new investor loan commitments rose a notable 18.3% in Western Australia in July, far beyond the next placed state Queensland at 8.6%.
Victoria (+4.5%), New South Wales (+4.0%), and South Australia (+3.0%) also recorded investor lending growth.
However, Queensland led growth in owner occupier lending by value at 6.6% ahead of Victoria and South Australia, both at 2.8%.
Western Australia's owner occupier lending remained steady with the previous month.
Lending and property prices
Australia's biggest home lender Commonwealth Bank of Australia said the stronger lending conditions are not directly related to higher home prices, given listings are rising in some capital cities.
The bank's analysts said this is dampening growth in some markets.
CommBank singled out Victoria as showing the weakest lift in investment loans over the past year, saying it was partly due to an increased land tax burden imposed on a wider number of investors.
The bank noted new listings in the state are above average and property prices are falling.
The data also showed home price falls in Victoria and strong gains in Queensland have seen the average loan size almost equal between the two states for the first time.
However the chatter about investors deserting Victoria's property market due to onerous taxes and red tape may be overblown, with lending values largely steady in the state and not drastically different to previous months at just under $2.6 billion.
Any slack in Victoria's property market could have been picked up by owner occupiers, with just under $5.6 billion owner occupier loans written, up from $4.4 billion in July 2023.
Borrowers still not taking fixed rate bait
Friday's lending data also showed that despite widespread cuts to fixed home loan rates in recent months, fixed-rate lending has shown no significant growth.
It remains at around 2% of all lending including refinancing, suggesting home buyers are choosing to sign up to variable rates in the hope interest rates will eventually fall.
The next release will cover August, which is when the slide in swap rates, bond yields, and ergo fixed lending rates, took hold.
Commonwealth Bank's economists are still holding out for a cut in the cash rate in November, although its big four peers are all forecasting it will be early- to mid-2025 before the Reserve Bank of Australia revises the rate downwards.
Image by Ruthson Zimmerman on Unsplash
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