Home loan demand continues to fall

by Rebecca Pike13 Apr 2018

Home loan demand continued to fall in February, despite experts saying it is usually a strong period.

New data from the Australian Bureau of Statistics (ABS) shows in trend terms 54,539 home loans were approved, a drop of 0.6% from January.

While the number of home loans approved dropped, the value of all dwelling commitments rose 0.2% (trend terms) to $33.2b over the month of February. It rose 1% in seasonally adjusted terms to $33.5b.

The value of owner-occupied housing rose 0.4% to $21.3b, while the value of investment loans written rose 0.2% to $11.9b.

Real Estate Institute of Australia (REIA) President Malcolm Gunning said that in trend terms drops were recorded across all states and territories except Tasmania and the Northern Territory. In Tasmania lending increased by 0.2% and in NT it remained flat.

The largest decrease was in Western Australia where it dropped by 1.4%.

Gunning said the proportion of first home buyers, as part of the total owner-occupied housing finance commitments, decreased marginally to 17.9% in February from 18% in the previous month.

He added: “The number of loans to first home buyers increased by 4.2% compared to January. The continued decline in housing finance reflects current market conditions with first home buyers being more active in the market in the last six months than in the previous five years.”

Mortgage Choice spokesperson Jacqueline Dearle said February is traditionally the time when people start to put their property plans for the year into action.

She added: “However, when we consider that the property market has been cooling in recent months, a decline in demand is reasonable.

“Home loan interest rates remain at historically low levels which is keeping the cost of borrowing at affordable levels. In addition, lenders are actively vying for business from both owner-occupiers and investors by offering competitive rates on their home loans. These factors should help keep home loan demand at relatively stable levels.”


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