HomeBuilder drives construction loans to record highs

author-avatar By on December 03, 2020
HomeBuilder drives construction loans to record highs

Loan commitments for the construction of new dwellings rose by more than 10% in October.

The figures from the Australian Bureau of Statistics (ABS) revealed the surge in construction loans drove the total value of new loan commitments for housing and the value of owner-occupied home loan commitments to record highs. 

The total value of new loan commitments for housing rose 0.7% to $22.7 billion in October, seasonally adjusted.

The value of new owner-occupier home loan commitments rose 0.8% to $17.4 billion in October 2020, more than 30% higher than October 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.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
WIN YOUR HOME LOAN INTEREST FREE

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • WIN your home loan interest free and save up to $1.1 million. Refinance by 29 October. T&Cs apply.
  • Refinance Only. Fast online application, refinance in minutes, not weeks.
  • No Nano fees, Free 100% offset sub account. Mobile app. Visa debit card & instant payments.
WIN YOUR HOME LOAN INTEREST FREE

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • WIN your home loan interest free and save up to $1.1 million. Refinance by 29 October. T&Cs apply.
  • Refinance Only. Fast online application, refinance in minutes, not weeks.
  • No Nano fees, Free 100% offset sub account. Mobile app. Visa debit card & instant payments.
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services

Rates correct as of September 26, 2021. View disclaimer.

ABS head of Finance and Wealth Amanda Seneviratne said the surge in construction loans could be partly attributed to first-home buyers taking advantage of the federal Government's HomeBuilder scheme.

“Commitments for the construction of new dwellings rose 10.9% and was the largest contributor to the rise in October’s owner-occupier housing loan commitments," Ms Seneviratne said.

"The value of construction loan commitments has risen by 65.6% since July, which coincides with the June 2020 implementation of the Government’s HomeBuilder grant in response to COVID-19."

Ms Seneviratne added “feedback from lenders was that there has been a large increase in first home buyers applying for these construction loans over the last few months.”

lendindoct201

Source: ABS

Housing Industry Association (HIA) economist, Angela Lillicrap, said HomeBuilder was the catalyst for improving consumer confidence in the housing market. 

“We do not expect this to be the peak of the cycle. HIA New Home Sales data suggests that detached housing finance approvals will continue to be strong over the coming months," Ms Lillicrap said.

"The extension of HomeBuilder will see strong results carry over into 2021.

“It is evident in today’s data that HomeBuilder has been successful in creating work on the ground in the December quarter and will protect jobs across the economy."

First home buyers out in force

The number of owner occupier first home buyer loan commitments increased by 3.4% in October, to reach 13,481, seasonally adjusted, well above the forecasted 2.8% rise.

This was more than 30% higher than in any pre-COVID month since 2009, when the first home owner grant was temporarily tripled as part of the Commonwealth Government’s economic stimulus package in response to the global financial crisis.

Buyers’ agent Grant Foley said it was clear first home buyers were making the most of the more subdued market conditions.

“The COVID-driven change in market conditions has presented first-time buyers with a genuine opportunity to make their move, especially in the inner urban apartment sector, which is typically popular with first-time buyers and has suffered bigger price falls than houses in similar areas,” Mr Foley said.

Victorian owner occupier home loan commitments fell 9.3% in seasonally adjusted terms, reflecting decreased housing market activity in August and September due to COVID-19 stage 4 restrictions in Melbourne and stage 3 in the rest of Victoria.

Victoria and the Australian Capital Territory were the only states and territories to record a fall in owner occupier home loan commitments. 

The total value of loan commitments for investor housing was unchanged at $5.3 billion, while the value of new loan commitments for fixed-term personal finance rose 4.3%, as car sales rebounded in October. 


Photo by Scott Blake on Unsplash

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): Great Southern Bank, 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 as a finance journalist in 2019. He enjoys covering in-depth economical releases and breaking down how they might affect the everyday punter. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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