Housing finance rebounds in June after fall 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.

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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. 

AU housing finance for June rebounds after previous month's fall. Notable that the recovery came in every state apart from Victoria underscoring the likelihood of ongoing property market weakness in Melbourne #ausbiz pic.twitter.com/zchnazyF74

— Alex Joiner (@IFM_Economist) August 5, 2020

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. 

Stripping out the great mass of refinancing, homebuyers begun to move again in Jun-20...but not in VICtoria

Unfortunately, that's only going to continue in July & August for VICtoria

(ABS) #ausbiz pic.twitter.com/OBbPXtFmRw

— Pete Wargent 🇦🇺 (@PeteWargent) August 5, 2020

[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."

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