New ABS Lending Data Shows Mortgage Liabilities Still Rising



Love for homeowners in Australia has intensified, and the latest lending data shows a rise in new home loan commitments.

The latest Australian Bureau of Statistics data for May shows new home loans increased 4.9% compared to April.

That equates to $ 32.6 billion in new debt, driven by an increase in new investor loans being signed.

Catherine Keenan, head of finance and welfare at ABS, said the May rally was fueled by double-digit growth in new loans to investors.

“In May 2021, new commitments to lend to investors in residential construction rose 13.3% to $ 9.1 billion, the highest level since June 2015,” Keenan said.

“Loans to investors accounted for 28 percent of the total cost of home loan commitments in May 2021, up from 46 percent in 2015.

“This reflects a very strong increase in loan commitments to home owners over the past year.”

The growth in loans to investors occurred mainly in New South Wales and Victoria, which grew by 12.1% and 17.4%, respectively.

Homeowner loans to first home buyers fell 0.8% but remain strong as government schemes are helping new entrants in the real estate market.

Low interest rates are also helping to increase the number of loans issued for housing construction.

Early homebuyer activity remained strong in New South Wales and Victoria, Ms Keenan said.

“However, the number of early home buyers in Queensland, Western Australia and South Australia has fallen in the past few months following the termination of HomeBuilder and state government initiatives such as a grant for construction in Western Australia.”

RateCity research director Sally Tyndall said investor buyers are pushing early home buyers out of the market.

“Investors are starting to crowd out some early home buyers, and sky-high property prices are casting the dark cloud of their dreams of owning real estate,” said Ms Tyndall.

“While most government incentives are running out, another 10,000 first home loan slots opened this week, offering some early adopters the opportunity to get in.”

Ms Tyndall also expressed concern that the federal government’s view of easing responsible lending laws could have serious implications for the credit market and the amount of debt an individual can subscribe to.

“We’ve just hit another record high for home lending, but the government continues to repeal responsible lending laws to free up the flow of loans,” she said.

“If anything, the government should consider whether we need additional restrictions to cool the property market and protect Australian households from overburdening themselves with debt.”

Lending to individuals also increased: loans with a fixed term of financing grew by 5.6% over the month.

The ABS noted that the largest volume of lending fell on vehicles and personal investments.


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