Dip in home loan demand

by Maya Breen12 Mar 2015
ABS data shows home loan demand fell slightly in January, but remains high by historical standards.
According to the January Housing Finance Data from the Australian Bureau of Statistics, the number of dwelling commitments approved throughout January fell 3.5%.
A total 51,396 loans were approved throughout January – down from 53,254 the month prior.
Mortgage Choice spokesperson Jessica Darnbrough said although there was a slight drop in home loan demand, it remains incredibly strong especially with dwelling commitments hitting a five year high last month.
“Over the last 12 months, we have consistently seen more than 50,000 home loans approved each month,” Darnbrough said.
“The last time more than 50,000 dwelling commitments were approved each month for a year was back in 2009 when the boosted first home owner grants were in place.”
Darnbrough said many Australians were buying property because of falling interest rates combined with strong capital growth.
RP data research showed property prices are up 8.3% across Australia’s combined capital cities in the last year.
“This level of growth is helping to make property a very attractive investment option for Australians,” Darnbrough said.
“Furthermore, interest rates are currently sitting at 60 year lows making the cost of borrowing more affordable than it has been in a long time.”
Looking ahead, Darnbrough said she wouldn’t be surprised if home loan demand remained relatively strong especially as more investors look to take advantage of the current market conditions.
“The current market is prime for investors and with rates sitting at all-time lows, it is likely that the market will continue to favour this buyer segment for some time yet.”

The results also revealed that the number of loans for the construction of new homes fell 4.7% and the proportion of first-time buyers in the home loan market dropped to a ten-year low – easing from 14.3% to 14.2% in January.

According to REIA President Neville Sanders, the disappointing first home buyer figures make an argument in support of Treasurer Joe Hockey’s proposal to allow first home buyers to access their superannuation.

“First home buyers being at their lowest level for a decade and with moderating housing lending and GDP growth below trend, the current debate on allowing first home buyers access to their superannuation is timely,” concluded Sanders.

New online poll: Should first home buyers be able to access their superannuation for a house deposit?