July sees sharpest ever monthly rise in home loan lending

author-avatar By on September 09, 2020
July sees sharpest ever monthly rise in home loan lending

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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.

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."

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)."

See also: What happens to Australian house prices in a recession?

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.


Disclaimers

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 2019. 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.

*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.

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author-avatar
Emma joined Savings.com.au as a Finance Journalist in 2019. She is a journalist with more than five years experience across print, broadcast and digital media, with previous stints at Style Magazines, 4ZZZ radio, and as editor of The Real Estate Conversation. She's most passionate about improving the financial literacy of young women and millennials by writing about complex financial topics in a way that's easy for the average Joe (or Jill) to understand. When she's not writing about finance she's watching Greys Anatomy (again).

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