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Home loan value hits pre-GFC high

By Bianca Dabu 08 December 2020 | 1 minute read

Despite COVID-19, the value of new loan commitments for housing grew for the fifth consecutive month and the value of owner-occupier home loan commitments have reached record highs, the ABS October lending and business figures have revealed.

The seasonally adjusted value of new loan commitments for owner-occupier housing rose 0.7 per cent in October and 23.3 per cent for the year, with rises seen in all states and territories, except Victoria and the ACT.

According to Real Estate Institute of Australia (REIA) president Adrian Kelly, the sustained recovery in lending is encouraging and can be expected to be a major contributor to GDP in the December quarter for investors, owner-occupiers and first home buyers.

“The increase in loan commitments reflects low interest rates, improved consumer sentiment about purchasing a home, particularly among first home buyers, and response to HomeBuilder.”

Commitments for the construction of new dwellings rose 10.9 per cent and was the largest contributor to the rise in the month’s owner-occupier housing loan commitments, according to him.

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In contrast, home loans for owner-occupiers fell 9.3 per cent in Victoria, reflecting decreased housing market activity in August and September due to the COVID-19 stage 4 lockdown in Melbourne and restrictions in regional Victoria.

According to Mr Kelly, the Victorian owner-occupier home loan commitments were a reflection of the severe impacts of stage 4 lockdown on property activity.

Still, REIA said the October figures show promising signs for first home buyers and investors alike, with growth in both categories.

The number of owner-occupier first home buyer loan commitments increased by 3.4 per cent for the month. This is a level more than 30 percent higher than any month since 2009, Mr Kelly noted.

“That was when the then Commonwealth government increased the first home owner grant, which was temporarily tripled as part of the response to the global financial crisis.

“This is the fifth consecutive monthly increase for first home buyers. For investors, the value of loan commitments has increased by 0.3 per cent for the month and 2.8 per cent for the year.

“On the back of yesterday’s GDP growth figures, this reflects the market response to the current conditions, and improved borrowing conditions points towards a stable property outlook for 2021,” Mr Kelly concluded.

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Home loan value hits pre-GFC high
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