Housing finance records continue to tumble

“In January 2021, the value of new loan commitments for owner-occupier housing was 52.3 per cent higher than in January 2020,” ABS head of finance and wealth, Katherine Keenan, said.

The ABS points to government support during the COVID-19 pandemic as a major driver to the growth in new loan commitments. 

“Since the HomeBuilder grant was introduced in June 2020, there have been record rises in the value of construction loan commitments. Loan applications made late in 2020 (prior to the reduction of the HomeBuilder grant on 1 January 2021), contributed to the strong rise in January’s construction loan commitments of 15.7 per cent,” she said. 

Real Estate Institute of Australia (REIA) president Adrian Kelly said the increase in home loan commitments was a 12-year high. 

“The number of owner-occupier first home buyer loan commitments increased by 9.6 per cent for the month and is 70.8 per cent higher than 12 months earlier. This is the highest level since May 2009, when the Commonwealth Government’s response to the GFC included the temporary increase in the First Home Owner Grant,” he explained. 

Mr Kelly said owner-occupier first home buyer loan commitments accounted for 36.5 per cent of all owner-occupier commitments excluding refinancing.

“The increased activity by investors, first home buyers and owner-occupiers in the market shown in the January lending figures is impacting on prices and affordability. REIA’s Housing Affordability Report, which will be released on the 3rd of March, will examine this,” he explained. 

However, REIA said it is not just owner-occupiers who are taking advantage of stimulus packages, with investors also looking to get into the market.

“Loans to investors also increased for the eighth consecutive month, with the value of loan commitments for investor housing increasing by 9.4 per cent for the month, the largest rise since September 2016, and 22.7 per cent for the year on the back of improving rental market conditions,” Mr Kelly concluded.