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
ZERO APPLICATION FEESFEE FREE OFFSET

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

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
ZERO APPLICATION FEESFEE FREE OFFSET

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

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
FixedMore details
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

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

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
REFINANCE IN MINUTES, NOT WEEKS

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

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.

Rates correct as of January 21, 2022. 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. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

Latest Articles

author-avatar
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.

Collections:

Be Savings smart.
Subscribe for free money newsletters.

By subscribing you agree to the Savings Privacy Policy