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Home loan commitments hit record high

Owner-occupiers are fuelling a record high level of new loan commitments for housing, with Australian Bureau of Statistics figures showing a 3.7 per cent rise in April.

New mortgage commitments hit a record high of $31 billion in April, in seasonally adjusted terms, up from $30.2 billion in March.

ABS Head of Finance and Wealth Katherine Keenan said the value of new loan commitments for owner-occupier housing reached an all-time high of $23 billion, up 4.3 per cent on previous figures.

“The rise in owner-occupier lending was driven by increased loan commitments for existing dwellings, which rose 9.2 per cent,” she said.

“New loan commitments for investors rose 2.1 per cent to $8.1 billion, which was the highest level since mid-2017.”

Real Estate Institute of Australia President Adrian Kelly said the figures revealed strength in the property market at a time when it would traditionally be slowing down.

“Rises in the value of new loan commitments for owner-occupier housing were seen in all states and territories except Western Australia, with NSW and Victoria having the largest increases of 8.6 per cent and 8.4 per cent respectively,” he said.

“With housing finance figures being a leading indicator of market activity, this suggests a greater interest by buyers during the normally quieter winter months.

“This makes it a good time for listing, which many owners are doing with an unseasonal increase in listing inquiries.

“The coming months should see high levels of market activity.”

While there was a rise in investor and owner-occupier lending as a whole, the number of owner-occupier first-home buyer loan commitments fell 1.9 per cent to 15,171.

The number of loans for the construction of a new home also fell in April for a second consecutive month, dropping by 11.4 per cent following a fall of 14.8 per cent in March.

“These were the first monthly declines since the HomeBuilder grant was introduced in June 2020,” Ms Keenan said.

“However, the value of construction commitments remained at a high level.”

The HomeBuilder grant was reduced from $25,000 to $15,000 in January and was closed to new applications in mid-April.

Housing Industry Association economist Angela Lillicrap said the cooling in construction loans was consistent across all states and territories.

“This is the first ABS data to show that we are past the peak in the surge in construction due to HomeBuilder,” she said.

But she noted that lending for renovations remained strong.

“The value of loans for alterations and additions is up by 66.7 per cent in the three months to April 2021 compared to the same time last year,” Ms Lillicrap said.

“Households have diverted funds that would have typically been spent on overseas travel into buying a new home or improving their existing one.”

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