New lending data from June delivers hope

by Madison Utley06 Aug 2020

Data from the Australian Bureau of Statistics (ABS) has revealed new home loan commitments charted a small recovery in June, leaving some within the market hopeful activity will rebound quickly as Australians regain confidence in the economy. 

The value of new loan commitments for housing was up 6.2% over the month, seasonally adjusted.

The rise reflects the easing of COVID-19 restrictions in May on auctions, open houses and mobility in general, according to ABS chief economist Bruce Hockman.

For owner occupier housing, the value of new loan commitments rose 5.5% in June; for investors, it was up 8.1% and for owner occupier first home buyers, commitments rose 3.3%.

Hockman highlighted the rebound in lending activity followed large falls in April and May, meaning the value of new commitments in June was still down over 10% as compared to March.

However, notably, new loan commitments in June 2020 were up 4.5% from the same month in 2019.

According to Canstar group executive of financial services, Steve Mickenbecker, the data suggests Australians were feeling comfortable enough to transact again over the month; while the second wave of the pandemic may threaten the continuation of the trend, he remains hopeful of its longer-term implications.

“The June recovery shows borrowers were back to buying, but this may be short lived with the larger states grappling with the pandemic’s second wave,” he said.

“[However], it indicates borrower intent for a time when the virus is under control.”

For Raj Ladher, home loan specialist at YourMortgageBroker, an unpredictable housing and mortgage market has become the expectation. As such, his team is focused on discerning borrowers' needs amidst the tumult. 

“The stats coming out are very promising under the circumstances. With all the government grants and concessions available, along with rock bottom interest rates, we have seen a notable increase in enquiries which is great,” he said.

“At YourMortgageBroker, we’re busy trying to distinguish between a client who is ready to transact now versus one who is enquiring for later as early in the process as possible; it's crucial to ensuring we're ready and able to navigate each lender’s unique COVID policy and turnaround times.”