Aussies’ mortgage commitments spike

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October 12 2020
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Australians are committing to new home loans at unprecedented rates as record lows create a buying opportunity, official figures have revealed.

Monthly stats released from the Australian Bureau of Statistics (ABS) show the value of new loan commitments for housing, including from investors, spiked by 12.3 per cent for the month of August.

The value of owner-occupied home loan commitments increased in all states and territories, except the Northern Territory, with the largest increases recorded in Victoria, Queensland and NSW.

ABS head of finance and wealth Amanda Seneviratne noted a 13.6 per cent rise in new owner-occupier mortgages was the biggest month-on-month surge the bureau has on record.

This follows a record breaking July, where new loan commitments rose by 10.7 per cent.

“The value of owner-occupier home loan commitments was $16.3 billion in August, the highest value in the history of the series,” Ms Seneviratne said.

Owner-occupied approvals for constructions purposes recorded the sharpest monthly increase (19.2 per cent), followed by purchases of existing property (12.4 per cent) and purchases of new dwellings (4 per cent).

The share of first home buyer (FHB) approvals as a proportion of the value of owner-occupied volumes also increased considerably over the month of August, up from 10.6 per cent in July to 18.6 per cent.

ANZ Research noted the spike in owner-occupiers has been supported by record-low interest rates as well as federal and state initiatives, including the HomeBuilders grant and the First Home Loan Deposit Scheme.

The group also found that the property market might be resilient to the impacts of COVID-19 as core groups that purchase houses have not lost their employment.

“The concentration of COVID-19 job losses to younger, lower-income cohorts may also mean that the average upgrader has not been hit by economic weakness as hard as the average worker in the economy,” ANZ research found.

Upgraders generally account for 70-75 per cent of owner-occupier lending. These data are consistent with other indicators that point to housing being much more resilient than we had expected.”

But according to the ABS head of finance and wealth, the surge in August reflects the backlog of applications submitted in previous months, prior to the second wave of coronavirus lockdown measures.

“Lenders are reporting to us that current processing times mean that August commitments reflect customer demand in June and early July, prior to Victoria imposing stage 3 and stage 4 restrictions,” she said.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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