Lending still at historic highs

Investors continue to take advantage of low interest rates, according to data released this week by the Australian Bureau of Statistics (ABS).

The figures show that the value of new housing loans were down by 1.6 per cent in June 2021 (seasonally adjusted) but remain at an historically elevated level of $32.1 billion.

The value of new lending to owner-occupiers fell 2.5 per cent in June 2021. While this was the largest fall since May 2020, lending in this sector is still 76 per cent higher compared with a year ago and 64 per cent higher than pre-COVID levels in February 2020.

The biggest factor in the drop was a fall of 17 per cent in the value of loans for the construction of new homes. In addition to this, there was no change in lending to buy existing dwellings.

The fall in construction lending followed a period of rapid growth between July 2020 to February 2021 in which the value of loans rose by 150 per cent. This strength continued to unwind after the reduction in January of the HomeBuilder grant and its subsequent closing in April.

The value of owner-occupier loans fell in Victoria by 5.8 per cent, in New South Wales by 3.2 per cent and in Western Australia by 6.9 per cent. Queensland rose 1.8 per cent and the Australian Capital Territory rose 7.4 per cent.

The value of new loans for investor housing rose 0.7 per cent in June, after a rise of 13.3 per cent in the previous month.

The number of new loans to first home buyers fell for a second consecutive month, down 7.8 per cent in June. The sector remains elevated however, similar to that seen in November 2020.