Housing finance rebounds in June after fall in May

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on August 05, 2020
Housing finance rebounds in June after fall in May

Melbourne VIC, Australia. Photo by Gareth Harrison on Unsplash.

The value of new loan commitments for housing rose 6.2% in June, seasonally adjusted, after a sharp fall of 11.6% in May.

That's according to the latest Lending Indicators data from the Australian Bureau of Statistics (ABS), which shows the increase was largely driven by investment lending. 

New loan commitments for investors were up 8.1% month-to-month, or $4.4 billion, compared to owner-occupied housing which increased by 5.5% ($13 billion). 

On a yearly basis, owner-occupied housing is up by 8.7%, while investment housing commitments are down 6.1% (seasonally-adjusted). 

The number of owner occupier first home buyer loan commitments rose 3.3% on a monthly basis to 9,616 and is up an impressive 19.5% year-on-year, meaning first home buyers now account for 31.3% of all owner occupier commitments (excluding refinancing). 

ABS Chief Economist Bruce Hockman attributed the rise in housing loan commitments to the easing of COVID-19 restrictions in May around auctions, open houses and general personal mobility. 

“Despite the rebound in lending activity, the value of housing loan commitments in June was down over 10% compared to March after large falls in April and May,”
Mr Hockman said.

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

Variable
More details
  • Min 30% deposit
  • No monthly or ongoing fees, add 0.10% for offset
  • Unlimited redraws

Variable Home Loan (LVR < 70%)

  • Min 30% deposit
  • No monthly or ongoing fees, add 0.10% for offset
  • Unlimited redraws
Variable
More details
REFINANCE ONLY
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
REFINANCE ONLY

Variable Rate Home Loan – Refinance Only

  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Variable
More details
AN EASY DIGITAL APPLICATION
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
AN EASY DIGITAL APPLICATION

Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
Variable
More details
NO ONGOING FEES
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
NO ONGOING FEES

Yard PAYG Home Loan (Principal and Interest) LVR ≤ 80%

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster

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%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of August 10, 2022. View disclaimer.

Victoria sees fall - before COVID lockdowns struck 

June's housing recovery after May's historic falls was driven by pretty much every state except Victoria, which according to IFM Economist Alex Joiner, could underscore the likelihood of ongoing property market weakness in Melbourne. 

Each state bar-Victoria recorded either a large or modest increase in both investor and owner-occupier housing growth month-month, with the exception of Canberra: 

  • NSW posted a 9.5% and 13.7% growth in OO and investor housing respectively 
  • Queensland posted 19.5% and 15.1%
  • The ACT recorded 1.9% growth in OO housing but -5.8% in investment 
  • The Northern Territory posted a massive 45.7% growth in investment purchases and 19.4% in OO housing 

Victoria, on the other hand, saw a -5.8% decline in housing finance overall in June, with OO housing declining by 8.6% and investor housing recording a modest rise of 2.7%. 

However, these figures have happened before the worst of the state's COVID-19 outbreak occurred in July, and with new Stage 4 lockdowns coming into play in August, future results are likely to be even bleaker. 

[Read: One in ten home loans now deferred]

Commonwealth Bank Economists Kristina Clifton and Nicolas Guesnon said in an analysis of the results that while growth in June was strong, the reinstatement of stage 4 shutdowns in Victoria are likely to weigh on new home lending over coming months.  

"We do not see this month’s data as a turning point in home lending," they said. 

"Refinancing activity pulled back in June but still remains very strong. The uncertain economic backdrop seems to be prompting borrowers to find the best deal that they can on their home loans."

Buying an investment property or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for investors.

Lender

Variable
More details
  • Option to add an offset for 0.10%
  • No monthly or ongoing fees
  • Unlimited redraws

Smart Booster Investor Bundle (Principal and Interest)

  • Option to add an offset for 0.10%
  • No monthly or ongoing fees
  • Unlimited redraws
Variable
More details
GET APPROVED FASTER WITH A DIGITAL APPLICATION
  • Split Loan Option
  • Unlimited additional repayments
  • Free redraw facility
GET APPROVED FASTER WITH A DIGITAL APPLICATION

Neat Variable Investment Loan (Principal and Interest) (LVR < 60%)

  • Split Loan Option
  • Unlimited additional repayments
  • Free redraw facility
Variable
More details
100% FULL OFFSET ACCOUNT
  • Split Loan Option
  • Unlimited additional repayments
  • Free redraw facility
100% FULL OFFSET ACCOUNT

Ocean Investment (Amounts < $1m, LVR < 60%)

  • Split Loan Option
  • Unlimited additional repayments
  • Free redraw facility

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%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of August 10, 2022. View disclaimer.




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.

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author-avatar
William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

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