HomeBuilder and first home buyers see home loan commitments hit record highs

author-avatar By on January 15, 2021
HomeBuilder and first home buyers see home loan commitments hit record highs

Photo by Maximillian Conacher on Unsplash

The housing market continued its hot streak in November 2020, with home loan commitments hitting record highs.

Data from the Australian Bureau of Statistics (ABS) found the total value of new loan commitments for housing rose 5.6% in the month to $24 billion, seasonally adjusted, an impressive 23.7% increase on November 2019. 

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

The sharp increase in commitments was driven largely by first home buyers, with commitments from the group rising 3.1% in November to 13,905, seasonally adjusted, a 42.5% rise since the start of the year. 

This is also the highest level of first home buyers seen since October 2009, when similar rapid growth occured due to the temporary tripling of the First Home Owner Grant (FHOG) as part of the government response to the Global Financial Crisis. 

ABS head of Finance and Wealth Amanda Seneviratne said the strong increases were also driven by the HomeBuilder scheme and commitments to existing dwellings. 

“Loan commitments for existing dwellings rose 5.9% and were the largest contributor to the rise in November’s owner occupier housing loan commitments," Ms Seneviratne said.

“The value of construction loan commitments grew 5.6% in November, rising 75% since July. This follows the implementation in June of the Government’s HomeBuilder grant in response to COVID-19.

“Other federal and state government incentives and ongoing low interest rates also contributed to the continuing growth in new housing loan commitments.”

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Source: ABS

Housing Industry Australia (HIA) economist, Angela Lillicrap said she expected construction loan activity to continue its strong growth into 2021. 

“The number of construction loans to owner occupiers in the three months to November was 83.7% higher than the same time last year," Ms Lillicrap said.

“HIA New Home Sales data suggests that detached housing finance approvals will continue to be strong over the coming months.

"The extension of HomeBuilder at the end of November is not a factor in this month’s result but will see the strength in housing finance data extend into 2021."

Victoria saw owner occupier home loan commitments rise sharply, up almost 20% in November, sesonally adjusted, mostly due to increased commitments for vehicles. 

Commitments to vehicles also saw a strong increase in commitments for fixed term personal finance, up 13.2%. 

Investor housing commitment also saw a strong increase in November, up 6% to reach $5.6 billion. 

“Investors are returning to the market, with the value of lending to investors up by 3.7% for the three months to November 2020 compared to the same time last year. This was driven by loans for the purchase of existing dwellings," Ms Lillicrap said.


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Alex joined Savings.com.au in 2019. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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