Home loan demand on the rise

In a positive sign for the property market, recent data has shown that home loan demand has gone up following two months of declines.

According to the Australian Bureau of Statistics’ (ABS) housing finance data for October, 52,654 home loans were approved throughout the month. This is an increase of 2.2 per cent on the previous month.

The ABS data also revealed that a total of $30 billion of dwelling commitments were made, which was up 2.6 per cent on September.

Breaking this figure down, there was an increase of 3.5 per cent for owner-occupier loans to $20.1 billion, and a 0.6 of a percentage point value increase in investment loans to $9.8 billion.

Mortgage Choice CEO Susan Mitchell noted that this latest data is a “welcome lift” for the property market, however she also reflected on the volatility of monthly data.

“The previous month’s data revealed the weakest value of dwelling commitments in four years. While October’s unexpected results could signal a reversal in the recent softening in approvals, it is important to consider the volatility in monthly data comparisons,” Mitchell said.

Ms Mitchell further noted that the ABS data showed the first increase in the value of investment loans since February.

“The encouraging result may suggest that APRA’s lifting of the benchmark on investment lending is starting to have an effect on demand for investment loans.

“The recent decline in housing finance approvals may be attributed to the meticulous level of scrutiny lenders are applying to new home loan applications, which has increased the length of time it is taking for home loans to progress from application through to approval.”

Whether this latest data will be the sign of things to come is yet to be seen, but it is positive news going into 2019 and shows that even with house prices faltering in Australia’s biggest cities, there is still strong demand for property.


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