Demand for home loans keeps rising

Home loan demand has risen for the second consecutive month and lending for new homes has grown across the nation, new data shows

Demand for home loans keeps rising
The latest Housing Finance data from the Australian Bureau of Statistics found 54,404 home loans were approved over the month of June, a rise of 0.5% from the month prior.
 
“June was the second month in a row that we saw a lift in home loan demand,” Mortgage Choice chief executive officer John Flavell said.
 
“Winter is traditionally a slower period for the housing market, so to see an increase in dwelling commitments is an encouraging sign for both the property sector and the broader economy.
 
“The fact that interest rates continue to hover around record lows means the cost of borrowing remains at affordable levels, which is helping to keep heat in the housing market.” 
 
The ABS data also showed a 0.8% rise in the value of all dwelling commitments to $33.26 billion over the month of June.
 
“Interestingly, we saw a lift in the total value of both owner-occupied and investment loans,” Flavell said.
 
“The total value of all investment loans written rose 1.6% to $12.5 billion throughout the month of June. This result is somewhat surprising given the amount of changes we have seen lenders make to their investment pricing and policy.
 
“Australia’s lenders have continued to tweak the policy and pricing on their investment products, which has, in some instances, made it harder for would-be investors to qualify for a loan. 
 
“Of course the reality is, there are still a number of lenders in the market that are happy to write investment loans and are hungry for this business.” 

New home lending grows nationwide 
The Housing Industry Association’s senior economist, Shane Garrett noted that all the states and territories had seen growth in owner occupier loans for new dwellings over the month of June.

“The number of loans for new homes made to owner occupiers rose by 3.6% during June 2017 –the fourth month in a row to see expansion,” said Garrett.

“New dwelling starts reached an all-time record high during 2016 with activity likely to see a modest reduction over the remaining years of this decade.” 

Garrett says the HIA anticipates new home starts will fall over the next two years by about 24% from their peak by 2019 with activity bottoming out at around 175,000 starts per year.

“The apartment side of the market is likely to see the largest reduction in building activity. This is partly the result of heavier restrictions on foreign investor participation in the market which risk depriving rental markets of sufficient supply,” concluded Shane Garrett. 

The state that saw the largest rise in owner occupier loans for new homes was Tasmania (38.0%) followed by Queensland (29.5%) and the ACT (23.8%). Western Australia rose by 7.9%, the Northern Territory by 7.8%, New South Wales by 5.8%, South Australia by 4.6% and Victoria by 3.5%. 
 

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