Record high in new loan commitments for housing

The total value of new loan commitments for housing and the value of owner occupier home loan commitments each reached record highs in October 2020, according to the latest Australian Bureau of Statistics (ABS) figures released today.

The total value of new loan commitments for housing rose 0.7 per cent to $22.7 billion in October, seasonally adjusted.

The value of new owner occupier home loan commitments rose 0.8 per cent to $17.4 billion in October 2020, more than 30 per cent higher than October 2019.

ABS head of Finance and Wealth, Amanda Seneviratne, said: “Commitments for the construction of new dwellings rose 10.9 per cent and was the largest contributor to the rise in October’s owner occupier housing loan commitments. The value of construction loan commitments has risen by 65.6 per cent since July, which coincides with the June 2020 implementation of the Government’s HomeBuilder grant in response to COVID-19”. Ms Seneviratne, added that “feedback from lenders was that there has been a large increase in first home buyers applying for these construction loans over the last few months.”

In October, the number of owner occupier first home buyer loan commitments increased by 3.4 per cent to reach 13,481 (seasonally adjusted) which was more than 30 percent higher than in any pre-COVID month since 2009, when the first home owner grant was temporarily tripled as part of the Commonwealth Government’s economic stimulus package in response to the global financial crisis.

The value of owner occupier home loan commitments rose in all states and territories except Victoria and Australian Capital Territory. Victorian owner occupier home loan commitments fell 9.3 per cent in seasonally adjusted terms reflecting decreased housing market activity in August and September due to COVID-19 stage 4 restrictions in Melbourne and stage 3 in the rest of Victoria.

The values of commitments for existing dwellings and for residential land fell in Victoria. These falls were partly offset by rises in commitments for construction of new dwellings and for purchase of newly erected dwellings.

The total value of loan commitments for investor housing was unchanged at $5.3 billion.

The value of new loan commitments for fixed term personal finance rose 4.3 per cent in October, seasonally adjusted, as commitments for vehicles continued to recover from the fall in August.

The ABS appreciates the continued support of the Australian Prudential Regulation Authority (APRA) and lending institutions in providing the data used to compile this publication and for the additional data insights being provided by lending institutions.

More information is available in Lending Indicators, Australia.