Housing loans hit new record

The value of housing loans for purchase or construction of new dwellings lifted 6.8% in October 2020 compared with the prior month, totalling AUD5.135 billion. Perhaps the biggest news of all was that total loans for construction of new dwellings lifted a huge 9.2% compared to the prior month, to reach AUD3.496 billion.

As the chart below demonstrates, the total value of loans has risen continuously since April, with the biggest mover being the value of loans going to owner occupiers.


To go straight to the dashboard and take a closer look at the data, click here.

In October, loans to owner occupiers for new construction lifted 9.5% on the prior month to AUD2.935 billion, with investors seeing their loan values rise 8.0% to AUD0.561 billion.

The size of the government stimulus (a mix of Federal and State government support) has clearly helped drive the number and value of loans up since July. Coupled with crazy-low interest rates, housing finance has been booming. That is also made clear in the second chart, showing the number of loans issued.

This data is net of refinancing, so its total new commitments for established borrowers (the blue bars) as compared with first home buyers (the green bars). Both have fared well since June, when stimulus really became available.

Compared with September, loan approvals for October were up 1.5% (51,603 loans) for established borrowers and a solid 3.6% (14,716 loans) for first home buyers. But the more telling number is probably the year-on-year comparison. For established borrowers, the number of loans was up 17.3% and for first home buyers, a huge 40.8%.


To go straight to the dashboard and take a closer look at the data, click here.

Anyway we consider the loan data, the stimulus makes a difference. But nowhere does it make more of a difference than for first home buyers. That makes sense with their average home loan value over the last year up just 0.3% to around $410,000. In many cases, these borrowers are accessing government support of around 10% of their loan value, and that, it seems, is making all the difference.

Looking at the total housing loan data, we can see that while first home buyers have done very well over the last year and especially the last few months, the really big movers in lending have been established owner-occupiers. The chart below shows the total monthly value of loans, and it also shows who is taking out the loans.


To go straight to the dashboard and take a closer look at the data, click here.

The chart shows the total value of loans for new purchases and construction lifted 23.3% in October 2020, compared with a year earlier, hitting AUD22.682 billion, with the owner-occupier share up 31.2% over the same period to AUD17.389 billion (76.7% of the total).

Again, it is first home buyers who have filled their boots over the last year. In total, the value of their loans is up an enormous 48.6% to AUD5.469 billion. Of the total, they accounted for a solid 24.1% of total loan values, holding their own thanks to stimulus funding.

Not to be outdone, at least not entirely, those electing to stay where they are or stick with their investments, have been able to share in the largesse from government. That has seen a big lift in loan approvals for additions and alterations in October 2020. Inevitably somewhat more patchy, the Alts and Adds community saw loans up 7.0% in October 2020 compared with a year earlier, but investors experienced loans that were 20.9% lower over the same period.

However, as we see below, October 2020 saw big lifts compared with the prior month as new confidence entered the economy and Victoria came out of lockdown. Owner occupier reno loans were up 15.8% and those for investors were up 15.0%.


To go straight to the dashboard and take a closer look at the data, click here.

Everywhere we turn our eye, someone is writing a loan for a new build, to change house, to renovate an existing home or just to spruce up the inner city investment apartment. Supported by government stimulus and low interest rates, the national love affair with borrowing for housing continues to astound.