Home Lending Continues to Surge in August

Despite Australians being told that we are sitting on the brink of recession, statistics for August show another significant surge in new home lending. After a bumper month for new home lending in July, another $21.3 billion worth of new home loans settled in August.

Amanda Seneviratne, the ABS Head of Finance and Wealth said, "August’s 13.6% increase in the value of owner-occupier home loan commitments is the largest month-on-month rise in the history of the series, eclipsing the previous record of 10.7% set in July.”.

Ms Seneviratne also said that the impact the COVID pandemic has had on borrower behaviour and lender processing times paired with the pent-up demand is affecting the month-on-month numbers.

The big picture here though is that, according to recent ABS statistics, Australians are embracing property and spending more than ever on homes.

Owner Occupiers Lead the Way

August’s results show owner-occupiers leading the way with the value of new home loans up by 13.6% from July and 29.2% from this time last year.

Owner-occupier home lending commitments rose across all Australian states and territories apart from the Northern Territory. Victoria, Queensland, and New South Wales saw the most significant increases.

RateCity.com.au research director Sally Tindall said, “The country-wide lockdown put the brakes on home sales in May, but since then, the market has rebounded defiantly.”

“While this month’s data might be skewed by a backlog of home loans from the banks, over 200,000 new loans have settled since COVID hit – that’s a pretty decent number considering the turmoil we’ve been through.”.

The owner-occupier results in August were a standout as shown by the ABS state by state new owner-occupier lending statistics below.

State Value of new loans

August

Monthly % change Yearly % change
NSW $5.3 billion 7% 29%
VIC $4.7 billion 15% 24%
QLD $3.0 billion 14% 34%
SA $943 million 13% 27%
WA $1.4 billion 20% 34%
TAS $309.6 million 37% 39%
NT $76.8 million -2% 33%
ACT $443.7 million 27% 36%

Source: ABS lending indicators, seasonally adjusted data, excludes investors, excludes refinancing, value of new loans.

Government Incentives Fuel First Home Buyers

Australians looking for a first home to call their own had over 12,302 new home loans settle in August, to the value of $16.3 billion. The spike in first home buyers is comparable to that which took place straight after the Global Financial Crisis in 2007/2008.

This huge increase in first home buyers may be partially attributed to by the $400 million government injections to help Australians enter the property market. This includes the First Home Buyer’s Grant, The First Home Loan Deposit Scheme and, as a result of the COVID pandemic, The Home Builder’s Grant.

The current Government incentives combined with record low interest rates make owning a home more affordable than ever.

Investor Loans Show Signs of Recovery

Those with investment properties, especially in capital cities have taken a hit from the pandemic due to vacancy increases because of border lockdowns. The circumstances bought about by COVID-19 have, consequently, had an influence on investor lending.

However, an increase of 9.3% in new investor lending was seen in August’s results with the value of new investor loans reaching $5 billion. This data suggests that investor loan recovery could be on the horizon.

Bolt & Hunter Property Experts

Data suggests that the upward trend is well underway as the number of vacancies dwindle and home buyers become increasingly active. If you are looking to purchase your first home or build your investment property portfolio, Bolt & Hunter are here to help you.

Our seamless end-to-end service exists to help you secure the right property at the right price. We take the hard work out of making smart property purchases. Our friendly team is only a phone call away – don’t hesitate to get in touch. Contact us today!

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