Home loan commitments hit a new record in March 2021

author-avatar By
on May 04, 2021
Home loan commitments hit a new record in March 2021

New loan approvals for housing hit a brand new record in March, according to the latest data.

The Australian Bureau of Statistics (ABS) Lending Indicators data for March 2021 revealed new loan commitments rose 5.5% over the month, to hit a new record of $30.2 billion worth of loans. 

This comes after the previous month's data for February recorded a minor 0.4% decline in new loan approvals to $28.6 billion - the first fall since May 2020. 


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

Lender

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • 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%
UNLIMITED REDRAWSSPECIAL 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%
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • 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
Variable
More details
NSW/VIC/SA METRO & INNER REGIONAL AREAS
NSW/VIC/SA METRO & INNER REGIONAL AREAS

Variable Home Loan (Principal and Interest)

  • $5000 Cashback. T&Cs Apply.
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
NO ONGOING FEESFREE REDRAW FACILITY
  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.
NO ONGOING FEESFREE REDRAW FACILITY

Live-in Variable Loan (Principal and Interest) (LVR < 90%)

  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.

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 June 25, 2022. View disclaimer.

A major reason for this increase was a surge in investment lending, with investor loan approvals up 12.7% to $7.8 billion, seasonally-adjusted. 

That accounted for more than half of the month's gains, and ABS head of Finance and Wealth Katherine Keenan said investor lending had seen a sustained period of growth since the 20 year low seen in May last year. 

"The rise in March is the largest recorded since July 2003 and was driven by increased loan commitments to investors for existing dwellings," Ms Keenan said. 

“The value of new loan commitments for owner occupier housing rose 3.3% to $22.4 billion in March 2021, 55.6% higher than March 2020.

"This rise was driven by an 8.8% rise in the value of loan commitments for existing dwellings.”

Compared to the previous month, owner occupied lending fell 1.8% over the month, investment lending rose 4.5% to reach 31.6% higher than its level a year prior.

ABSlendMarch.jpg

Construction lending falls for the first time since HomeBuilder 

Construction lending approvals have risen steadily since the HomeBuilder scheme was announced, as February’s data showed an enormous 147% and 165.6% yearly rise in the value and number of new constructions respectively.

But since the grant was reduced from $25k to $15k at the beginning of the year, construction lending growth has slowed.

In March, the value of owner occupier loan commitments for the construction of new dwellings fell 14.5%, the first fall since the scheme was announced in June 2020. 

However, construction values for owner occupiers and investors are still up 123.6% and 54.3% over the past 12 months. 

Building a home? The table below features construction home loans with some of the lowest variable interest rates on the market.

Lender

Variable
More details
GET A DISCOUNTED GREEN RATE
  • Interest Only during construction
  • No monthly, annual or ongoing fees
  • Get Australia’s lowest rate construction loan when you go green
GET A DISCOUNTED GREEN RATE

Green Construction Home Loan (Interest Only)

  • Interest Only during construction
  • No monthly, annual or ongoing fees
  • Get Australia’s lowest rate construction loan when you go green
Variable
More details
100% FULL OFFSET ACCOUNT
100% FULL OFFSET ACCOUNT

Offset Package Home Loan (Principal and Interest) (LVR < 60%)

    Variable
    More details
    BUNDLE YOUR HOME LOAN AND YOUR INVESTMENT LOAN FOR MORE SAVINGS
    BUNDLE YOUR HOME LOAN AND YOUR INVESTMENT LOAN FOR MORE SAVINGS

    Yard Investor Bundle Loan (Bundled with Home Loan)

      Variable
      More details
      AN EASY ONLINE APPLICATION
      AN EASY ONLINE APPLICATION

      Yard Investment Loan (Principal and Interest) (LVR < 80%)

        Variable
        More details
        100% FULL OFFSET ACCOUNT
        100% FULL OFFSET ACCOUNT

        Offset Package Home Loan (Principal and Interest) (LVR 60%-70%)

          Variable
          More details
          GREAT FLEXIBLE LOAN OPTIONS
          GREAT FLEXIBLE LOAN OPTIONS

          Basic Home Loan (Principal and Interest) (LVR 70%-80%)

            Variable
            More details
            FREE REDRAW FACILITY
            • Pay more to reduce the amount of interest you pay
            • Easily access additional funds in your redraw
            • Great rates and low fees
            FREE REDRAW FACILITY

            Basic Investment Loan (Principal and Interest) (LVR < 60%)

            • Pay more to reduce the amount of interest you pay
            • Easily access additional funds in your redraw
            • Great rates and low fees
            Variable
            More details
            • Pay more to reduce the amount of interest you pay
            • Easily access additional funds in your redraw
            • Great rates and low fees

            Yard Investment Loan (Principal and Interest) (LVR > 80%)

            • Pay more to reduce the amount of interest you pay
            • Easily access additional funds in your redraw
            • Great rates and low fees

            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 June 25, 2022. View disclaimer.

            First home buyers fall again

            Having reached a 12-year peak in January 2021, first home buyer loan approvals have fallen for the second consecutive month. 

            The number of owner occupier first home buyer loan commitments fell 3.1% to 15,623 in March 2021, after February's 3.3% drop. 

            However, first buyer numbers are still 'highly elevated' compared to historical levels, and are still 58.3% higher over 12 months. 

            “Higher prices and reduced government incentives are predictably impacting first home buyer activity that fell by 3.1% over the month," Archistar Chief Economist Dr Andrew Wilson said. 

            “Housing markets generally remain buoyant and although activity is likely to ease from record levels over coming months – particularly for first home buyers, the re-emergence of investors will continue to place a floor under house prices.”

            See also: First home buyers borrowing $10k more than a month ago

            Westpac reports major lending growth

            In its interim financial results for the six months ended 31 March 2021, major bank Westpac reported a $2.6 billion growth in its mortgage lending.

            According to the bank, this was largely driven by owner-occupied lending, which was up $8.8 billion (3%), with new lending excluding refinancing totalling $27 billion overall. 

            This growth however was partially offset by a 3% fall in investment lending. 

            According to Westpac CEO Peter King, while the large growth in new lending was mostly driven by owner-occupiers, investors were beginning to return to the market. 

            Mr King said investor lending was up 31% over the four months to February 2021. 

            “It has been a promising start to the year with increased cash earnings, growth in mortgages and continued balance sheet strength," he said. 

            “We have made good progress this half and remain focused on improving the performance of our key businesses, including reducing loan approval times.

            “While we expect continued increases in home prices, as the supply of houses for sale increases, the rate of house price growth will likely moderate."

            Related: House price boom eases: Is the market losing steam?

            Westpac also reported a surge in demand for fixed-rate home loans, as the share of its loan book made up of fixed mortgages grew from 23% in March 2020 to 32% in March 2021. 

            This is similar to figures from Commonwealth Bank, which saw a 38% growth in fixed-rate lending in the second half of 2020

            Commonwealth Bank recently hiked some of its four year fixed-rate home loans, while Westpac has also increased the cost of various fixed-term loans in recent weeks. 


            Photo by Wynand van Poortvliet 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.

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            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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