The value of new loan commitments for housing rose sharply in July, up 8.9% (seasonally adjusted), the biggest month-on-month rise ever recorded.
That's according to the Australian Bureau of Statistics (ABS) Lending Indicators data for July, released today.
ABS head of Finance and Wealth Amanda Seneviratne said the rebound in lending figures was buoyed by COVID restrictions easing.
“July owner-occupier home loan commitments rebounded with the largest month-on-month rise in the history of the series, as social distancing restrictions eased in most states and territories," she 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.
Smart Booster Home Loan
- Discount variable for 1 year <=80% LVR
- No ongoing fees
- Unlimited redraw facility
Monthly repayments: $1,476
- Discount variable for 1 year
- No ongoing fees
- Unlimited redraw facility
Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.
The data also found the value of new loan commitments for owner-occupier housing rose 10.7%, while investor housing rose 3.5%.
The number of owner-occupier first home buyer loan commitments also rose 14.4%.
“New loan commitments for owner-occupier housing rose in all states and territories, except the Australian Capital Territory. The largest increases were in New South Wales, Victoria and Queensland", Ms Seneviratne said.
“The value of new loan commitments for owner-occupier housing in Victoria rose 8.9% in July, reflecting the period of eased COVID-19-related restrictions prior to restrictions tightening again from later in July."
Another strong rise in housing finance approvals in July, for owner-occupiers the largest monthly rise in the history of the series, suggests that property markets should stabilise #ausbiz pic.twitter.com/AIS7qSgQQC— Alex Joiner (@IFM_Economist) September 9, 2020
CBA now expecting national house prices to fall 6%
Commonwealth Bank has revised its initial forecast of national house price falls of 10% and now expects a national peak to trough fall of 6%.
The bank said it has been surprised by the resilience of house prices in some capital cities considering the impact the COVID crisis has had on employment.
"We continue to expect prices to ease. But we are now looking for a national peak to trough fall of 6% versus our previous call of 10%," said CBA economist Gareth Aird.
"We now expect that trough to arrive in Q1 2021 (versus end 2020 previously)."
The bank also said it expects a much larger disparity between house price falls by capital city than previously forecast.
"For example, we have forecast a fall in Melbourne property prices of 12% from April 20 to Q1 2021, whilst prices are expected to increase modestly in Hobart and the ACT over that period," Mr Aird said.
"For the record, we had always expected Melbourne and Sydney to underperform relative to the national average. The NSW and Victorian economies have more exposure to the most heavily impacted services sectors and less exposure to some of the more insulated sectors (i.e. mining and agriculture).
"In addition, the Sydney and Melbourne housing markets are more reliant on strong population growth via net overseas migration to underpin demand. But what we didn’t know of course was that COVID‑19 would have a much bigger impact on the Melbourne economy relative to the other capital cities."
The bank also said it expects house prices will bounce back by the end of 2021.
"Our central scenario is that dwelling prices plateau in Q2 21 before rising over H2 21. Our forecast is for solid price growth in H2 21 as the economic recovery gains traction and incredibly low interest rates once again become the dominant influence on dwelling prices," he said.
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): Credit Union Australia, 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.
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.
- GFC was worse than COVID: Treasury
- Your phone, internet and Netflix bills could cost $140,000 in your lifetime
- HomeBuilder and first home buyers see home loan commitments hit record highs
- ME Bank, Freedom Lend cut home loan rates
- Aussies spending 40% of their monthly income on bills