Home loan demand surges

September 09, 2019

Home loan demand continues to rise, shows new data from the Australian Bureau of Statistics (ABS).

The latest data (5601.0) from the ABS reveals that, in seasonally adjusted terms, there was a significant increase in the number and value of home loans to owner-occupiers over the month of July, following a rise in June.

According to the ABS, 48,662 home loans to owner-occupiers were approved throughout the month of July – an increase of 5% on the month prior.

Mortgage Choice Chief Executive Officer, Susan Mitchell said, “The surge in demand suggests that home buyers reacted strongly to back-to-back rate cuts from the Reserve Bank, with a clear increase in new mortgage lending, over refinances over the month of July,” said Ms Mitchell.

This is the second successive month in which the value of lending increased. In addition to the rise in home loan demand, there was an increase in the value of home loans written to owner-occupiers, rising to $19.5 billion in July. Value of home loans to owner-occupiers (excluding refinance) rose 5% in July. There was also an increase in the value of loans to investors (excluding refinance), which rose almost 5% over the month of July to $7.2 billion.

“The number of loans to first homebuyers grew in July, rising 15% on the month prior. This lift was supported by a 20% lift in the value of loans to first homebuyer,” said Ms Mitchell.

Ms Mitchell said, ‘The ABS data shows that first home buyers made up almost 30% of owner-occupier commitments. This suggests they are feeling more confident about the property market, given that dwelling values seem to have found a floor, consecutive rate cuts from the Reserve Bank have pushed home loan interest rates to all-time lows, and the lowering of serviceability floor rates has increased the borrowing capacity for some borrowers.

Looking ahead, Ms Mitchell expects to see home loan demand to continue to rise over the next few months.

“We continue to see encouraging signs from the property market, with the latest CoreLogic Hedonic Home Value revealing that national dwelling values recorded the first rise in nearly two years and auction clearance rates are posting strong gains particularly in the nation’s two largest markets, Sydney and Melbourne.

“As we enter the Spring selling season, all eyes will be on sellers who are yet to match buyer enthusiasm in Sydney and Melbourne with listings down 20% and 8% respectively year on year.

“I would encourage anyone looking to apply for a home loan to speak to their local mortgage broker first to ensure that they are putting their best foot forward when the time comes to apply for a home loan. While buyer sentiment seems to have vastly improved, buyers should be aware that the home loan process is still incredibly complex and should be navigated with the help of an experienced mortgage broker who can help find a home loan suited to the buyer’s unique financial needs,” concluded Ms Mitchell.