First Home Buyer Lending Holds Up

Property investor lending has remained steady over the March quarter despite increasing economic tensions and the effect it will have on the national property market.

According to new figures from the Australian Bureau of Statistics the value of new loan commitments rose 0.2 per cent over the month, lifting 17 per cent year-on-year.

The number of new loan commitments for owner-occupier housing rose 1.2 per cent in March while investor lending fell 2.5 per cent.

While investor lending dropped 1.3 per cent during the March quarter compared to the December quarter, the current result is still 6.5 per cent higher than same time last year.

First home buyers have remained active, edging up to capture a 32 per cent share of the lending market, the highest proportion since November 2009.

First home buyer loans increasing by 2.5 per cent over March and lifted by 3.6 per cent over the quarter to be 20.6 per cent higher than same time last year.

The average loan size for first home buyers also increased over March from just over $415,000 in February to $427,000.

The lending data also showed that personal finance fixed-term loan commitments fell by 8.2 per cent in March.

ABS chief economist Bruce Hockman noted that new loan commitments for housing were steady in March despite escalating Covid-19 restrictions.

“March loan commitments largely reflected loan applications submitted in February or the first half of March before major restrictions were introduced.”

“Some lending institutions reported a slowdown in new loan applications towards the end of March.”

By state, New South Wales saw the largest increase in home loan growth, up 11 per cent over March, while Victoria and Queensland both saw drops of 0.7 per cent and 1.6 per cent respectively.

Since Covid-19 restrictions came into full force in late March, rising unemployment, elevated household mortgage debt and frozen population growth have sparked fears that a downturn could ensue with more broad-based impacts, particularly on the rental market.

Housing Industry Association chief economist Tim Reardon said the latest lending figures showed some positive signs for the construction market pre Covid-19.

“These results, along with other leading indicators such as new home sales and building approvals data, continue to confirm that the housing market had reached a turning point mid-way through 2019, providing further evidence that the housing market, pre-Covid-19, was heading into 2020 looking upwards.

“These results show that up to the end of March, we were looking at solid home building activity across most regions in 2020.”