Home loan demand bounces back in May

July 11, 2017

Home loan demand has bounced back throughout the month of May, according to new data from the Australian Bureau of Statistics.

The latest Housing Finance data found 54,061 loans were approved throughout May, up 1% from the previous month.

“This bounce back in home loan demand is a positive sign for the property market and the broader economy,” Mortgage Choice chief executive officer John Flavell said.

“That said, this bounce back in home loan demand is hardly surprising. The fact is, the property market remains relatively buoyant, with historically low interest rates keeping the cost of borrowing low and heat in the market.”

According to the data, the value of all dwelling commitments rose 1.3% to $33.03 billion over the month of May.

“While there was a 2.9% rise in the value of home loan approvals for owner-occupied housing, we saw a 1.4% drop in the value of investment loans,” Mr Flavell said.

“Of course, I am not at all surprised by this. Over the past few months, Australia's banks have been significantly tweaking their policy and pricing in relation to investment lending.

“In particular, we have seen some significant changes in the area of interest only loans. Some lenders have raised their pricing, while others have adjusted their policy.

“As a result, we have seen some potential property investors put their purchase plans on the backburner indefinitely.”

Looking forward, Mr Flavell said he expected home loan demand to remain relatively strong, especially in the owner-occupied space.

“Interest rates are still low and will remain so for some time to come. In addition, some of the states have introduced new first home buyer incentives, which should also help to keep some heat in the market,” he said.

“That said, the Australian property market is very complex at the moment. So, anyone thinking of buying or refinancing should speak to their mortgage broker to ensure they find the right product for their needs.”