FHB loan commitments reach post GFC 2009 levels

by Mark Rosanes04 Dec 2020

New loan commitments for housing hit a record-high $22.7 billion in October, a 0.7% uptick from the previous month and a 23.3% rise year-on-year, according to seasonally adjusted figures from the Australian Bureau of Statistics (ABS).

Owner occupier first home buyer (FHB) loan commitments accounted for more than a third, or 35.3%, of the overall owner occupier commitments, rising 3.4% the month prior, with the value jumping 3.1% from September.

The data also showed the number of loans for FHBs was 30% higher than in any pre-COVID-19 month since 2009, when FHB incentives were tripled in response to the global financial crisis.

In a statement, the ABS said that a combination of government stimulus, including the HomeBuilder grant, and low interest rates has pushed more FHBs to enter the property market.

According to the report, the value of owner occupier construction lending rose by 10.9%, reaching $2.85 billion in October. The figures were an 85.5% jump year-on-year and a 65.6% increase since July when quarantine measures were introduced.

The findings come on the heels of Canstar’s 2020 Consumer Pulse Report showing that 10% of Australian adults are currently prioritising saving for a home.

“With first home buyers and lending for new builds booming, political leaders must be congratulating themselves on the COVID-19 support measures for these sectors,” said Steve Mickenbecker, financial services group executive at Canstar.

“The ABS October lending commitments data shows that Australia is embarking on a housing led recovery, which should strengthen in coming months now that Victoria has opened up for business.”

However, according to ABS’ data, the value of external refinancing fell 7.1% from the month prior but up 22.9% from October last year. Mortgage holders refinanced $12.1 billion worth of home and investment loans the past month.