New ABS data released this week shows home lending is back with a bang, posting a 5.1 per cent jump month-on-month in new home loans settled in July.
Owner-occupiers saw the biggest growth, increasing 5.3 per cent in value in July compared with June figures, in seasonally-adjusted terms, excluding refinancing.
Investors have continued their come-back into the housing market, with the value of investor loans increasing 4.7 per cent, under the same terms.
Housing finance
| Value of new loans | % change from previous month | % change year on year |
| Owner occupiers | 5.3% | -8.3% |
| Investors | 4.7% | -20.4% |
| All loans | 5.1% | -11.8% |
First home buyers have continued their slow but steady return to the market, increasing their share of new owner-occupier lending to 29.4 per cent in July, up from 29.3 per cent in June – the highest proportion since January 2012.
Meanwhile, fixed loans continue to fall out of favour with borrowers. The proportion of owner-occupiers fixing fell to 10.4 per cent, which is the lowest level since October 2015.
RateCity.com.au research director, Sally Tindall, said the stars are starting to align for borrowers in the lead up to the spring property season, despite the gloomy economic outlook.
“Borrowers are feeling buoyed by a combination of plummeting interest rates, tax cuts, more relaxed serviceability measures and clarity around negative gearing,” she said.
“Interestingly, this is the first month that factors in APRA’s axing of its seven per cent serviceability floor. It’s likely that part of the bounce can be attributed to this, and we expect it to continue to have a positive effect on the market.
Home loan share
| Share of loans July 2019 | Share of loans June 2019 | |
| First home buyer share | 29.4% | 29.3% |
| Fixed loan share | 10.4% | 14.1% |
First home buyer share excludes refinancers. Fixed loan share includes refinancers.
“However, Australians are still on the sidelines when it comes to fixing, despite banks’ best efforts to attract new fixed borrowers onto their books”, Ms Tindall said.Â
“It’s not surprising that a lot of Australians are now opting not to fix their home loan rate in this climate when the RBA has made it clear there could be one, if not two more rate cuts to come.
“There are now dozens of lenders offering fixed rates below three per cent and as low as 2.74 per cent, for owner occupiers paying principal and interest, especially if they have a decent amount of equity in their home.”
