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Home loans hit dizzying heights as first home buyers flock to the market

Home loans hit dizzying heights as first home buyers flock to the market

The value of home loans settled in the month of October has hit an all-time high, thanks to a boom in construction lending and a comeback by first home buyers.

The latest ABS lending indicators released today, showed the total value of owner-occupier home loans settled in the month of October was $17.4 billion – a record high – up 31.2 per cent year-on-year, in seasonally-adjusted terms.

All lending also hit a record high of $22.68 billion, up 23.3 per cent year-on-year.

Value of new lending

OctoberMonthly change Year-on-year change
Owner occupiers$17.4 billion

0.8%

$129.7 million

31.2%

$4.1 billion

Investors$5.3 billion

0.3%

$17.3 million

2.8%

$145.3 million

Total$22.7 billion

0.7%

$147 million

23.3%

$4.3 billion

Source: ABS lending indicators October 2020, released 3 December 2020, seasonally adjusted data.

First home buyers – the highest number of loans settled in a decade

One of the main contributors to this record busting month was first home buyers. The number of first home buyer owner-occupier loans settled in October was 13,481, the highest monthly figure since October 2009.

New loansOctober numberMonthly change Year-on-year change 
Owner occupier13,481

3.4% 

48.1%

Source: ABS lending indicators October 2020, released 3 December 2020, seasonally adjusted data.

How home loan finance has changed since COVID – original data

  • 306,222 new home loans were settled in the last 7 months (April to October)
  • 191,063 loans have been refinanced in the last 7 months (April to October)
  • The value of new home loans in October was 22.6% higher than in March before COVID hit.

Construction loans were also up, rising by 10.9 per cent in October, spurred on in recent months by the HomeBuilder grant.

Lockdown and working from home has also prompted families to engage in renovations.

Sally Tindall, research director at RateCity.com.au, said the government should reconsider their plans to scrap their proposed changes to responsible lending laws on the back of today’s figures.

“The primary reason for scrapping responsible lending laws was to free up the flow of credit. Looking at today’s figures it’s hard to see where the problem is,” she said.

“House prices are on the rise, housing finance just hit a record high and first home buyers are finally making their mark. Housing credit seems to be flowing nicely.

“Record low interest rates, targeted government grants and last year’s changes to serviceability rules have all helped people get their home loan approved under the existing system.

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This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.

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