Home loan approvals surge despite rate hike threat

by Miklos Bolza18 Jan 2017
Mortgage demand has remained high with new data from the Australian Bureau of Statistics (ABS) showing the total number of dwelling commitments increasing by 0.9% throughout November last year.
Looking at the seasonally adjusted statistics, 54,603 home loans were written in November to a value of almost $33.2 billion, an increase of 2.2% from the month before.
“The last time we saw more than 54,500 home loans approved in one month was back in July 2016,” said Mortgage Choice CEO John Flavell.
“This data would suggest the threat of higher interest rates is doing little to stifle home loan demand.”
While the total value of all owner-occupier mortgages rose slightly by 0.4% to just over $19.9 billion, the value of fixed loans for investors shot up by a whopping 4.9% to almost $13.3 billion.
Flavell said he wasn’t surprised to see this increase in the value of all mortgage commitments.
“Data from CoreLogic found property values across the combined capital cities rose 0.2% in November, taking the median dwelling price to $610,000,” he said.
“Moving forward, I wouldn’t be surprised to see another lift in the value of all dwelling commitments approved in December, as recent data from CoreLogic found property values rose 1.4% last month.”
Savanth Sebastian, senior economist at CommSec Research, was more pessimistic about these trends, saying the lift in home loans together with the increase in house prices could cause “a little bit of angst” to policymakers throughout the year.
“[This is even] more so when you delve a bit deeper into the data and realise that the lift in the value of loans was largely driven by investors.”
If home prices continue their upward trend along with a surge in investor loans, Sebastian said that regulators may seek to further curb lending.
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