New loan values in February fell 1.7% pre-coronavirus

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on April 08, 2020
New loan values in February fell 1.7% pre-coronavirus

Photo by Mitchell Luo on Unsplash

New loan values in February 2020 were down 1.7% in seasonally adjusted terms compared to January, according to data released today.

That's according to the Australian Bureau of Statistics (ABS) Lending Indicators data for February 2020, which also found new loan commitments rose 0.4% and 0.5% for owner-occupiers and investors respectively, implying borrowers are borrowing less.

This also represents a 1.7% and 1.9% respective drop in new loan commitments in seasonally-adjusted terms on February 2019, according to ABS chief economist Bruce Hockman.

“February’s fall in the value of new loan commitments for housing follows considerable growth in the series from mid-2019 onwards," he said.

The ABS release also noted there was "no notable impact" from the COVID-19 virus on new lending commitments in February - before travel restrictions and restrictions on auctions and inspections took place.

The total value of new loan commitments in February for owner-occupiers was $14.15 billion, and $5.30 billion for investors in seasonally-adjusted terms.

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
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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
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  • Free redraw facility
Variable
More details
100% FULL OFFSET ACCOUNT
  • Free redraw facility
  • Split account option
  • Unlimited extra repayments
100% FULL OFFSET ACCOUNT

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

  • Free redraw facility
  • Split account option
  • Unlimited extra repayments

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 7, 2022. View disclaimer.

Coronavirus won't impact data until March

Westpac senior economist Matthew Hassan said the results were softer than expected, but to expect steeper drops in March's data.

"The detail was soft across most segments and is despite both price gains and turnover still holding up reasonably well in the month," he said.

"While the starting point is a touch softer the main story is still of a likely severe decline as coronavirus effects impact in coming months."

However, Mr Hassan did point to a positive in the data - an uptick in construction loans.

"Construction-related loans bucked the wider monthly decline, posting a 1.9% rise, likely supported at the margin but post-bushfire rebuilding activity," he said.

Housing Industry Australia economist Angela Lillicrap highlighted first home buyer activity was strong and that investor lending is showing signs of improvement.

“First home buyers remained active in the market, with the largest number of loans issued to first home buyers during the month in over a decade," she said.

“Investor lending was also improving, up by 3.4% in the quarter to be 6.3% higher than the same time last year."

The news comes after experts predicted 20% to 30% price drops by the end of the year.




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
Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison strives to deliver and edit news and guides that are engaging, thought-provoking, and simple to read.

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