Big 4 extends freeze on foreclosures until 2022
A major bank has announced that it is extending the freeze on foreclosures it first announced in November 2020, until...
Demand for home loans rose in May, although investors are seeing a fall in home loan value.
According to the latest Housing Finance data, 54,061 total loans were approved in May, an increase of one per cent from April.
The value of all dwelling commitments also rose 1.3 per cent to $33.03 billion in May.
“This bounce back in home loan demand is a positive sign for the property market and the broader economy,” Mortgage Choice CEO John Flavell said.
“That said, this bounce back in home loan demand is hardly surprising. The fact is, the property market remains relatively buoyant, with historically low interest rates keeping the cost of borrowing low and heat in the market.”
However, a 1.4 per cent fall in home loan values was recorded for investment loans, while there was a 2.9 per cent rise in home loan approvals for owner-occupied housing.
“Of course, I am not at all surprised by this. Over the past few months, Australia’s banks have been significantly tweaking their policy and pricing in relation to investment lending,” Mr Flavell said.
“In particular, we have seen some significant changes in the area of interest-only loans. Some lenders have raised their pricing, while others have adjusted their policy.
“As a result, we have seen some potential property investors put their purchase plans on the backburner indefinitely.”
Mr Flavell predicts home loan demand to maintain its strong bounce back, particularly for owner-occupiers.
“Interest rates are still low and will remain so for some time to come. In addition, some of the states have introduced new first home buyer incentives, which should also help to keep some heat in the market,” he said.
“That said, the Australian property market is very complex at the moment. So, anyone thinking of buying or refinancing should speak to their mortgage broker to ensure they find the right product for their needs.”
Interest is the amount of money charged by a lender or financial institution for a loan, which is calculated as the percentage of the principal amount paid over the loan term.
Property refers to either a tangible or intangible item that an individual or business has legal rights or ownership of, such as houses, cars, stocks or bond certificates.