New loan commitments for housing rose 10.5 per cent to $28.8 billion in January 2021 (seasonally adjusted), reaching another record high, according to Australian Bureau of Statistics (ABS) figures released today.
ABS head of Finance and Wealth, Katherine Keenan, said: “In January 2021, the value of new loan commitments for owner occupier housing was 52.3 per cent higher than in January 2020. The value of new loan commitments for existing dwellings was 38.7 per cent higher and the value for construction loan commitments was 141.0 per cent higher.”
“Since the HomeBuilder grant was introduced in June 2020, there have been record rises in the value of construction loan commitments. Loan applications made late in 2020 (prior to the reduction of the HomeBuilder grant on 1 January 2021), contributed to the strong rise in January’s construction loan commitments of 15.7 per cent.”
In January 2021, the number of owner occupier first home buyer loan commitments rose 9.6 per cent, reaching the highest level since May 2009 (16,664, seasonally adjusted), when similar rapid growth was spurred by the temporary tripling of the first home owner grant in response to the global financial crisis. Compared to January 2020, there was a 70.8 per cent rise in owner occupier first home buyer loan commitments.
The value of loan commitments for investor housing rose 9.4 per cent, the largest rise since September 2016, to reach $6.6 billion.
“Investor lending has rebounded 62.4 per cent since reaching a 20 year low in activity in May 2020.”, Ms Keenan said.
The value of new loan commitments for fixed term personal finance rose 0.2 per cent in January (seasonally adjusted).
Our Views
Clearly the rise in home lending is a great signs for confidence in the economy. The data shows that lending for established housing has increased substantially which is cause for concern as excessive house price inflation can lead to poor outcomes.
Lending for Construction of new dwellings is also up significantly which has more positive spin offs to trades and other household goods sectors in the economy.
QLD, NSW and Victoria appear to be the major beneficiaries of the increased lending rates.
Overall, investor lending is still well below peaks, predominantly due to the lack of foreign activity in the market.
Whilst house prices are on the rise, apartment prices remain subdued and will remain so as long as investors remain out of the market.
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