New ABS lending data shows home loan commitments are still surging

The nation’s urge to buy a home has continued, with new lending data showing a surge in new mortgages.

Australia’s home ownership love affair has intensified, with latest lending figures showing a surge in loan commitments for new housing.

Latest figures from the Australian Bureau of Statistics for the month of May show a 4.9 per cent jump in new housing loans compared to April.

This equates to $32.6 billion of new debt committed, driven by a bump up in the number of new investor loans being signed.

ABS head of finance and wealth, Katherine Keenan, said May’s surge was driven by double digit growth in new investor loans

“The value of new loan commitments for investor housing rose 13.3 per cent to $9.1 billion in May 2021, which was the highest level since June 2015,” Ms Keenan said.

“Investor loans equated to 28 per cent of the total value of housing loan commitments in May 2021, compared to 46 per cent in 2015.

Investor loans drove the rise. Picture: Jason Edwards

“This reflects the very strong growth in owner occupier loan commitments over the last year.”

Investor loans growth was primarily in NSW and Victoria which rose 12.1 per cent and 17.4 per cent respectively.

Owner occupier loans for first home buyers fell 0.8 per cent, but remain at high levels due to government schemes helping new entrants into the property market.

Low interest rates are also assisting in the number of new loans being committed for housing.

“First home buyer activity remained at high levels in NSW and Victoria,” Ms Keenan said.

“However, the number of first home buyers has fallen over the last few months in Queensland, Western Australia and South Australia, following the cessation of HomeBuilder and state government initiatives such as the Building Bonus Grant in Western Australia.”

RateCity research director Sally Tindall said investor buyers are pushing first home buyers out of the market.

RateCity research director Sally Tindall said investor buyers are pushing first home buyers out of the market. Picture: Supplied

“Investors are starting to elbow out some first home buyers, with sky-high property prices casting a dark cloud of their home ownership dreams,” Ms Tindall said.

“While most government incentives are wrapping up, another 10,000 First Home Loan Deposit Scheme places opened up this week, offering some first buyers an opportunity to get in.”

Ms Tindall also expressed concern the federal government’s look at easing responsible lending laws could have grave impacts on the lending market and the amount of debt an individual is able to sign up for.

“We’ve just clocked up yet another record high in home lending, yet the government is pushing ahead with the scrapping of responsible lending laws to free up the flow of credit,” she said.

“If anything, the government should be looking at whether we need more restrictions in place to cool the property market and protect Australian households from overburdening themselves with debt.”

Personal lending also rose, with fixed term finance loans rising 5.6 per cent over the month.

The ABS noted lending was highest for road vehicles and personal investment.