Home Loans Rebound, No Recovery in June

New investor home loans outpaced owner-occupiers in June, with both series showing a bounce back following the historically large falls in May.

New loan commitments for housing rose 6.2 per cent in June reflecting $17.4 billion in total lending commitments, reveals the latest Australian Bureau of Statistics data.

The recovery in lending was not unexpected with the reduction of Covid-19 restrictions largely attributed to stimulating home buying activity throughout the month.

Owner-occupier loans increased 5.5 per cent to $12.9 billion for the month, according to ABS figures released on Wednesday.

Investor figures recorded a rise of 8.1 per cent to $4.4 billion, marking the first sign of growth in the investor sector of the market since the end of 2019.

And the number of first home buyer loan commitments increased by 3.3 per cent.

“Despite the rebound in lending activity, the value of housing loan commitments in June was down over 10 per cent compared to March after large falls in April and May,” ABS chief economist Bruce Hockman said.

But despite the uptick, stage four pandemic-related restrictions in Melbourne are expected to hit Victoria's incomes and housing finance activity.

CBA senior economist Kristina Clifton said CBA did not see this month’s data as a turning point in home lending, with the shutdowns in Victoria likely to weigh on new home lending over the coming months.

While Victoria's workers and businesses could suffer the worst of the impact, ANZ’s Adelaide Timbrell and David Plank expect employment in the rest of the country to be affected.

“This puts downward pressure on borrowing capacity and risk appetite for many buyers,” the ANZ economists said.

The majority of the rise in owner-occupiers was seen in Queensland and New South Wales, while Victoria recorded a decline.

The monthly ABS stats also show new loan commitments for construction increased 57.3 per cent to $3.1 billion for the month of June.

“Construction for non-building structures and non-residential building drove a volatile rise in construction finance for businesses in June,” Hockman said.