Home loan values hit record high in November – ABS

by Micah Guiao17 Jan 2022

The value of home loan commitments rose in November, according to new figures from the Australian Bureau of Statistics (ABS).

And the spike in home loan commitments came as the average loan size amounted to a remarkable $596,000 nationally, beating old records across all states and territories except Western Australia.

According to ABS, the value of new home loan commitments rose 6.3% to $31.4 billion in November after three consecutive months of dampened activity. This was also around the same period when the Australian Prudential Regulation Authority (APRA) lifted its serviceability buffer from 2.5% to 3% for lenders.

Katherine Keenan, head of finance and wealth at ABS, said the 7.6% rebound was the first rise since May 2021 and the largest since January 2021.

“This was surprising given that some of the major lenders have been increasing fixed lending rates in recent months,” Kristina Clifton, economist at Commonwealth Bank of Australia (CBA), told Australian Financial Review.

Owner-occupier loan commitment was strongest in Victoria and New South Wales, with a rebound of 9.7% and 9.6%, respectively. The rebound can be traced back to eased restrictions in these states after spending many months in lockdown. In-person auctions and inspections had returned, appeasing what worries borrowers have to purchase a home.

However, the case was different for first-home buyers, who were the most impacted by APRA’s move. Last August, first-home buyers accounted for only 35% of all owner-occupier loans before the serviceability buffer – and that number has only declined since.

Although its values in November finally broke its negative trend since January, the number of new loan commitments was still 17.4% lower compared to 2020.

The investor market also boasts a new record, with the value of new loan commitments from investors rising 3.8% to $10.1 billion.

“Investor lending has grown for the past 13 months, and accounted for around one-third of the value of new housing loan commitments in November 2021,” Keenan said. “The previous investor lending peak in April 2015 accounted for 46% of new housing loan commitments.”