New mortgage lending reaches record highs

  • By AB+F Editorial

The value of new mortgage lending rose to an historic high of $22.7 billion in October which could signal a housing led recovery.

New data from the Australian Bureau of Statistics showed that the value of new home lending increased by 0.7 per cent in October, the largest contributor was the construction of new dwellings, with the value of construction loans rising by 65.6 per cent since July. 

The data highlights that the HomeBuilder grant and low interest rates has spurred more first home buyers into the market. One in three consumers have a positive sentiment towards buying a home. 

RFi Group's latest data revealed that customers aged 25 to 44 were more likely to think about buying a property. 

An assessment from Canstar highlights that the data shows the number of loans for first time buyers was 30 per cent higher in October than in any pre-COVID-19 month since 2009, a time when first home buyer incentives were tripled in response to the global financial crisis. 

With first home buyers and lending for new builds booming, political leaders must be congratulating themselves on the COVID-19 support measures for these sectors,” Canstar finance expert Steve Mickenbecker said. 

“The ABS October lending commitments data shows that Australia is embarking on a housing led recovery, which should strengthen in coming months now that Victoria has opened up for business.

The ABS data also revealed that the value of owner occupier construction lending rose by 10.9 per cent in October to reach $2.85 billion, up 85.5 per cent year on year and 65.6 per cent since July when measures were introduced.

The value of external refinancing, however, was down 7.1 per cent from the month prior but up 22.9 per cent from October last year. 

Furthermore, investment lending lagged, only up 2.8 per cent from last year. 

Mortgage holders refinanced $12.1 billion worth of home and investment loans

“FOMO must be creeping back into the psyche of first home buyers as they follow the bullish commentary on house prices through to 2022,” Mickenbecker added.