Home loan demand surges in January

March 11, 2020

Data released today from the Australian Bureau of Statistics (ABS) has revealed that home loan demand surged in January 2020.

The data (5601.0) from the ABS reveals that in seasonally adjusted terms, there was an increase of 3.1% in the number of home loans to owner-occupiers.

The total value of loans to owner-occupiers rose 6.1% over the month of January, an increase of nearly 30% year on year.

The ABS data revealed that the total value of loans to investors rose 3.6% over January, up almost 15% year on year.

Mortgage Choice Chief Executive Officer Susan Mitchell said, “The latest data from the ABS shows that the nation’s housing market kicked off 2020 with a bang, after experiencing a turnaround in the second half of 2019.”

“The strong growth across both owner-occupiers and investor borrowers was larger than expected. Heightened borrowing activity suggests that the ongoing growth in dwelling values is likely to persist for some time yet.”

“Indeed, the latest figures from CoreLogic reveal that national dwelling values surged by 1.1% over February, with values across five of the nation’s eight capital cities reaching a record-high.”

“Extremely attractive home loan interest rates and relaxed lender policy may be fuelling investor demand. We are seeing competitive pricing on longer-term fixed rate home loan products, with some lenders offering rates below 3%, which is unprecedented.

“While we can only speculate on the outlook of investors going forward, the uncertainty in both the domestic and global economy may be encouraging consumers to invest their money in stable asset classes. As the expression would suggest, investors may be choosing to park their funds in property, which is safe as houses.

“Only time will tell if the momentum will continue long-term. As the global and domestic economic outlook faces significant headwinds, property investors may park their buying plans.

Moving forward, Ms Mitchell said while there is some uncertainty ahead, demand for property is likely to remain robust.

“Interest rates continue to sit at historic lows and may fall even further in coming months. As such, now may be a good time for buyers hoping to take advantage of competitive home loan deals to discuss their options with their local mortgage broker,” concluded Ms Mitchell.