Home loan volumes have slipped for a second month in a row in a sign of a slowing market but analysts expect activity to dip further from next month when recent regulatory curbs start to bite.
The value of mortgages approved rose a seasonally adjusted 0.9 per cent to $33.18 billion in March, according to data from the Australian Bureau of Statistics.
However, the number of home loan approvals fell 0.5 per cent during the month, missing market expectations of a flat result.
JP Morgan economist Henry St John said the weakness appeared to be broad-based, with every state other than Tasmania recording negative growth in owner-occupier home loan volumes.
"Today's housing finance data provides a fairly strong signal that property market activity is beginning to slow, even before APRA's fresh round of macro prudential policy materialises," he said in a note.
The Australian Prudential Regulation Authority (APRA) in late March capped interest-only mortgage lending, telling lenders to limit higher risk interest-only loans to 30 per cent of new residential mortgages.
That set off a fresh round of rate increases by the major lenders, with banks repricing their loan book to make interest-only and investor loans more expensive, to comply with the new limits.
The value of loans approved for owner-occupied housing rose 0.9 per cent in March, while loans for investment housing lifted 0.8 per cent, the ABS data showed on Monday.
Analysts had expected the bounceback after a sharp 5.9 per cent slide in the value of investor loans last month, and said the increase in March is likely because of continuing strong price growth.
However, investor lending is expected to slow in coming months.
"Note that the latest round of macro-prudential tightening was only announced in late March with impacts likely to come through in coming months," Westpac economist Matthew Hassan said.
Earlier this month, the Reserve Bank of Australia kept the cash rate steady but its concerns about high levels of household debt look to be mellowing following its stern warning to lenders and the tightening of rules on mortgage lending.
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