New mortgage commitments fell for the first time since May 2020, with new home owner-occupant loan commitments also falling.
Australian Bureau of Statistics (ABS) loan indicators data for February 2021 showed new housing loan commitments fell for the first time since May 2020, falling 0.4% to $ 28.6 billion. dollars in February (seasonally adjusted).
The value of new home loan commitments for homeowners fell 1.8% to $ 21.7 billion in February.
This follows a 10.9% increase in January to $ 22.1 billion, the highest monthly figure on record and the first time this segment has crossed the $ 22 billion mark.
However, commitment levels remained strong compared to last year, with ABS figures showing new housing loan commitments increased by 48.8% in February 2021 compared to February 2020, while owner-occupied housing increased by 55.2%.
New loan commitments to investors rose 4.5% in February 2021 to nearly $ 7.0 billion, an increase of 31.6% from February 2020.
Commenting on the numbers, ABS Finance and Wealth Manager Katherine Keenan said the decline in liabilities in February was due to the drop in loan commitments for existing homes, but noted that the value remained 39 , 7% higher than in February 2020.
“The value of new home construction loan commitments rose 4.4%, continuing a period of record increases since July 2020,” said Ms. Keenan.
“Although the HomeBuilder Grant, introduced in June 2020, was reduced from January 1, 2021, it was made more widely available to borrowers in NSW and Victoria through increased price caps on new construction contracts. “
Commenting on the increase in investor loan commitments, Ms. Keenan said: “The time taken to process home loans means that construction loan applications filed in late 2020, prior to these changes, also contributed to reported loan commitments. in February.”
Analysis by Housing Industry Association (HIA) chief economist Tim Reardon of ABS figures showed that the number of new home construction loans increased in February, and was the sixth month consecutive record.
He added that the number of construction loans granted to homeowners in the three months to February 2021 is 43.0% higher than in the previous quarter and two and a half times higher than in the same period per year. latest.
He also noted that loans for renovations had reached their highest level since 2009, with the value of loans for alterations and additions in the three months to February 2021 47.6% higher than the same period last year.
First-time homebuyers have accounted for over 40% of loans over the past seven months, with Mr Reardon saying they will “ride the wave of homebuilders” and that was the largest share. strong segment since the stimulus launched during the GFC.
Across all states, the number of homeowner loans for new home construction in the three months to February 2021 compared to the same period last year more than tripled in Western Australia, tripling in the Northern Territory, nearly tripled in Queensland and Tasmania, more than doubled in South Australia, ACT and Victoria, and nearly doubled in NSW, Reardon’s analysis showed.
Speaking on the trends, Mr Reardon said: “The demand for new housing has increased since mid-2020 due to a combination of HomeBuilder Program, record interest rates and the gap populations far from apartments and capitals to individual house and regional areas. “
“Households have changed their spending habits in response to COVID-19 interruptions. Many have embezzled funds that would typically have been spent on travel and entertainment to buy a new home or improve their existing home. “
He concluded: “These data provide further evidence of the unusually high volume of new homes that will begin construction in 2021 as well as the record level of renovation spending.”
[Related: Home values up 400% in 30 years: study]
Malavika Santhebennur is the Mortgage Securities Editor at Momentum Media.
Prior to joining the team in 2019, Malavika held positions at Money Management and Benchmark Media. She has been writing about financial services for six years.