Surge in lending to home owners

Home owners are borrowing more than they were at the peak of the 2017 housing boom.

Prices rises around the country have been driven by a surge in the number of “upgraders” looking to secure their subsequent homes.

Home owners are borrowing more than they were at the peak of the 2017 housing boom, according to new data on household lending released on Wednesday.

The value of owner-occupier housing finance, excluding investor credit, climbed to a record high in January, surpassing the previous high recorded in August 2017 by 2.6 per cent. New loan commitments through the first 31 days of the year were up 4.6 per cent.

Lending data from the Australian Bureau of Statistics showed the average new mortgage for an owner-occupier has grown 20 per cent since late-2018, despite the sharp downturn in the market during that time.

Housing Industry Association chief economist Tim Reardon said the result demonstrated a healthy improvement in lending following the credit squeeze and Royal Commission into banking.

“Overall housing market conditions continued to strengthen in January,” Mr Reardon said.

“The latest increase in lending has been the strongest monthly increase in the cycle thus far. It also takes the value of lending to be worth some 28.2 per cent higher than the weak point in May last year,” he said.

Prices rises around the country have been driven by a surge in the number of “upgraders” looking to secure their subsequent homes, while first-home buyers are looking to take advantage of the government’s deposit scheme have also seen them dominate a disproportionality high market share.

Investor lending remains at very low levels after a slight uptick through January, with the group now representing 27.5 per cent of loans. Property researcher CoreLogic’s head of research Tim Lawless said this reflects a mix of low rental yields, mortgage rate premiums on investor loans and heightened uncertainty.

Competition from the higher number of first-home buyers and ability to access finance is also a determining factor.

The results predated the effects of restrictions on trade and travel due to coronavirus. Across the country,lending to owner-occupiers in January 2020 was up in most capital cities.