Housing finance climbs to record high

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HOUSING finance commitments are up 5.5%, reaching a new record high for the month of March.

According to new statistics released by the ABS, financing is up in March, while this excludes refinancing, record levels are being reached through a month increase of 12.7% going to investors and 5.2% increase to owner occupiers, excluding first home buyers.

Owner occupiers saw $22.41 billion in new borrower-accepted loan commitments, while investors saw $7.81 billion.

This making up a $30.23 billion in total household new borrower accepted loan commitments, representing this 5.5% monthly change, and a 55.3% annual change.

“While it led the charge higher helped by various first home buyer incentives and investors being in retreat on the back of tighter lending standards and weak unit rental markets in Sydney and Melbourne, first home buyers look to have peaked as incentives are reduced, demand has been brought forward and worsening affordability is starting to bite,” said AMP Capital’s Shane Oliver.

Meanwhile first home buyer financing has fallen by 0.9% to $6.82 billion or 22.6% of total finance in March.

“Meanwhile investors are surging back into the market on the back of low rates and as the worst seems to be over in terms of inner city unit rental falls in Sydney and Melbourne, although investor demand is more likely being concentrated in outer suburban areas and in other cities,” added Oliver.

Investor financing eclipsed that of first home buyers and driven by low interest rates, shows little sign of slowing down.

“The resurgence in investor financing and the continuing surge in owner occupiers who are trading up points to further near term strength in home prices. It also points to a further acceleration in housing debt, a further rise in the share of interest only loans and increasing lending at high loan to valuation ratios,” said Oliver.

For owner occupiers there were new loan commitments for the construction of 8,272 new dwellings, 3,081 for the purchase of existing newly erected dwellings and 28,549 for the purchase of existing dwellings. With 15,623 new loan commitments by first home buyers.

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