The banks are easing their squeeze on new mortgages with new loans to investors rising in October for the first time since February, alongside an increase in loans to owner-occupiers.

The proportion of first-home buyers in the home loan market rose to 18.1%, a six-year high. There was a 2.3% rise in new mortgage approvals in October, following falls in the previous two months. The October rise was the strongest growth rate since July 2017.

Westpac senior economist Matthew Hassan says the previous weakness in loan approvals may have related to processing delays as lenders apply more rigorous assessments. Loan approvals rose in all states except WA, which suggests an easing in new mortgage supply bottlenecks.

In annual terms, loans in total are down 4.8%, mainly due to the investor drop-off. But CommSec senior economist Ryan Felsman says first-home buyers continue to be very active.

“The average home-loan size lifted in October, suggesting some buyers are still gaining access to sizeable loans, despite tighter lending standards,” he says.