New Home Lending falls back in Australia

Sydney, Australia

Lending for new homes in Australia fell back at the start of the new year, according to new figures from the ABS.

The data shows that the volume of loans for new homes eased back during January 2017, although the volume of loans for new homes remains at a “very elevated” level, explains the Housing Industry Association,.

About 99,620 loans were made over the year to January 2017, with the total number of owner occupier loans for the purchase or construction of new homes down 1 per cent month-on-month and 0.4 per cent year-on-year. The volume of loans for new home purchase declined by 0.3 per cent during January with lending for the construction of new dwellings dipping by 1.4 per cent.

“There are two dynamics going on with respect to new home loans. With 2016 representing the strongest year for new dwelling starts since the end of WWII, a huge number of new homes are now becoming available for purchase making lending volumes in this area accordingly high,” says HIA Senior Economist Shane Garrett.

“However, the number of loans to people constructing their own home has actually been falling back since mid-2014 and this trend has affected overall lending activity.”


Mortgage momentum fuels positive outlook for Australian housing

10th February 2017

Momentum in Australia’s new home mortgage market is fuelling a positive outlook for the year ahead.

The latest ABS figures on housing finance show that December was the strongest month of 2016 for the number of owner occupier loans.

The number of loans to owner occupiers for the purchase of new and established dwellings rose by a strong 2.4 per cent in December 2016. Within this, the number of loans for established dwellings grew by 2.9 per cent, while total lending for new dwellings (construction and new purchase) increased by 0.9 per cent, in seasonally adjusted terms. In December 2016, construction loans to owner occupiers dipped slightly by 0.3 per cent in seasonally adjusted terms, while loans for the purchase of new homes saw growth of 3.2 per cent.

“It appears that borrowers have again taken advantage of the lower interest rate environment as evidenced by December’s positive results for new home finance,” says Geordan Murray, Economist for the Housing Industry Association.

“Netting out refinancing, the number of loans for owner-occupiers hit its highest monthly level for 2016 in December,” adds Murray, who says that the positive momentum is “a very good sign that Australia’s housing market will hold up well in 2017”.

In December 2016 the number of loans to owner occupiers constructing or purchasing new homes increased in only two states. Comparing December last year to the same month in 2015, new home lending grew in Queensland (+4.9 per cent), and Victoria (+3.9 per cent). The number of loans to owner occupiers constructing or purchasing new homes declined in Western Australia (-22.4 per cent), South Australia (-14.6 per cent), Tasmania (-11.9 per cent), and New South Wales (-2.9 per cent).

Nonetheless, others have forecast that mortgage rates will increase in the coming months, despite the Royal Bank of Australia keeping rates unchanged and low. The Australian reports that figures from RateCity show all of the country’s major banks have been lifting rates since November’s US election.

“Though a range of leading financial institutions still expect official rates to keep dropping this year, our most popular banks are lifting rates relentlessly,” reports the publication. “The latest batch of increases came from NAB on January 16 with a range of changes to investor loan rates.”

Last month, the NAB announced that had decreased its 1 year Package Fixed Rate for Home Loans to 3.89 per cent per annum for owner occupiers. However its 2, 3 and 4 year Package Fixed Rate for Home Loans increased to 3.98 per cent, 4.09 per centand 4.59 per cent per annum respectively; and 2, 3, 4 and 5 year Package Fixed Rate for Residential Investment Home Loans changed to 4.19 per cent, 4.29 per cent, 4.79 per cent, and 4.79 per cent per annum respectively.

“There are a range of factors that influence the funding that NAB – and all Australian banks – source, so we can provide home loans to our customers,” NAB Chief Operating Officer, Antony Cahill, said in a statement.

“The cost of providing our fixed rate home loans has increased over recent months. We continue to watch market and economic conditions to ensure we continue to lend and manage our business responsibly, so we remain strong and stable for the benefit of our customers, shareholders, and the broader economy.”