Morning Briefing: New home lending falls in January

Loan volumes for new homes fell over January but the demand for home loans remains strong, new data shows

Morning Briefing: New home lending falls in January

New home lending falls in January
The volume of loans for new homes eased back during January, recent figures from the ABS reveal.

“Despite the reduction during January, the actual volume of loans for new homes remains at a very elevated level – about 99,620 loans were made over the year to January 2017,” said Housing Industry Association senior economist Shane Garrett.

During January 2017, the total number of owner occupier loans for the purchase or construction of new homes fell by 1.0% and was 0.4% lower than a year earlier. The volume of loans for new home purchase declined by 0.3% during January with lending for the construction of new dwellings dipping by 1.4%.

“There are two dynamics going on with respect to new home loans. With 2016 representing the strongest year for new dwelling starts since the end of WWII, a huge number of new homes are now becoming available for purchase making lending volumes in this area accordingly high. However, the number of loans to people constructing their own home has actually been falling back since mid-2014 and this trend has affected overall lending activity,” Garrett said.


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Home loan demand continues to be strong, with the data showing that the number of dwelling commitments approved rose 0.5% throughout the month of January.

“January was the sixth consecutive month of growth for home loan approvals,” Mortgage Choice chief executive officer John Flavell said. “The latest data suggests that current low interest rates are continuing to fuel buyer demand for property.”

In addition to a rise in home loan demand, there was an increase in the value of home loans written. “In total, nearly $34 billion of home loans were approved throughout January – up 1.5% on the month before,” Flavell said. “This can be largely attributed to the increase in value of investment loans approved.

“During the month of January, more than $13.7 billion in investment loans were approved – up 4.2% from December. On the other hand, the value of owner-occupied housing loans fell 0.2% to $20.1 billion.”