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New loan commitments for housing have declined for the first time since May 2020, but months of growth have ensured records have been maintained, new data has shown.
After eight consecutive months of growth, new loan commitments for housing fell 0.4 per cent to $28.6 billion in February 2021, the Australian Bureau of Statistics’ (ABS) Lending to Households and Business figures showed.
While this is the first fall in almost a year, commitments remain close to record high levels, the report indicated.
According to ABS head of finance and wealth Katherine Keenan, the fall in February was driven by reduced loan commitments for existing dwellings, but the value of these loan commitments remained 39.7 per cent higher than in February 2020.
Overall, new loan commitments for owner-occupier housing fell 1.8 per cent in February 2021, but stood 55.2 per cent higher compared with February 2020.
All states and territories, except NSW, Queensland and the ACT, saw lifts in new loan commitments for owner-occupier housing.
NSW had the largest fall at 4.9 per cent, while Victoria had the largest increase at 4.2 per cent.
“With lending approvals being a leading indicator of demand and anecdotal information from agents suggesting that increased listing enquiries will improve supply, we should see an easing of pressure on prices and thus not requiring any macro-prudential measures to curb lending,” according to Real Estate Institute of Australia (REIA) president Adrian Kelly.
“Borrowers should nevertheless be prudent in their borrowing, and with their bank’s assistance, pressure test their ability to meet repayments should interest rates increase,” he continued.
On the other hand, the value of new loan commitments for investor housing rose 4.5 per cent to $6.9 billion in February 2021, which is 31.6 per cent higher than in February 2020. This is on the back of improving rental market conditions, Mr Kelly highlighted.
“Investor lending continued an unbroken period of growth since reaching a 20-year low in May 2020,” Ms Keenan noted.
Increases were seen in all states and territories, with the exception of Tasmania and the two territories.
The largest increase in the value of new loan commitments to investors was seen in Victoria for the second consecutive month, with an increase of 13.1 per cent in February.
Meanwhile, the value of loan commitments for the construction of new dwellings has also risen by 4.4 per cent on the back of a consistent period of record rises since July 2020.
According to Ms Keenan, the HomeBuilder grant continued to influence the results despite being reduced from 1 January 2021 as “it was made more widely available to borrowers in NSW and Victoria through increased price caps on new build contracts”.