Mortgage demand still on the rise – report

APRA may have to step in if pace continues, expert warns

Mortgage demand still on the rise – report

Demand for new home loans rose in December, according to figures released Tuesday by the Australian Bureau of Statistics.

The ABS said housing loans spiked 4.4% in December, driven by a 5.3% increase in new loans for owner-occupiers.

“This is the second consecutive monthly rise in owner-occupier lending and follows the falls seen from June 2021 through to October 2021,” Amanda Seneviratne, ABS acting head of finance and wealth, told the Australian Associated Press.

Reserve Bank Governor Philip Lowe warned Tuesday that with interest rates at historically low levels, it was vital that lending standards were maintained and borrowers had sufficient buffers, according to a report by the Australian Associated Press. However, Lowe said following the RBA’s Tuesday board meeting that the central bank would remain “patient” before raising the cash rate.

Loans for owner-occupier first-home buyers rose for the second consecutive month in December, up 1.3%, according to ABS data. However, first-home buyer loans were still 21.5% lower than their December 2020 level.

Read next: More Aussie couples buying a home before marriage – report

Investor loans, on the other hand, are booming. Investor housing loans rose 2.4% month over month in December, 73.9% higher than a year prior, the Australian Associated Press reported.

ANZ senior economist Adelaide Timbrell told the Australian Associated Press that the spike in mortgage demand could continue in the first half of the year as low unemployment rates and stronger savings during Omicron encouraged Aussies to borrow.

“If lending continues at this pace, APRA may consider more measures to slow it,” Timbrell said.

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