New ABS Loan Data Shows Mortgage Liabilities Continue to Rise

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Australia’s love affair between homeownership has deepened, with the latest loan figures showing an increase in loan commitments for new homes. Photo: Jason Edwards

Australia’s love affair of homeownership has intensified, with the latest loan figures showing an increase in loan commitments for new homes.

The latest figures from the Australian Bureau of Statistics for May show a 4.9% increase in new home loans compared to April.

This equates to $ 32.6 billion in new debt incurred, due to an increase in the number of new investor loans signed.

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ABS chief finance and wealth manager Katherine Keenan said May hike was driven by double-digit growth in new loans to investors

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

“Investor loans represented 28% of the total value of home loan commitments in May 2021, up from 46% in 2015.

Loans to investors were behind the increase.  Photo: Jason Edwards
Loans to investors were behind the increase. Photo: Jason Edwards


“This reflects the very strong growth in homeowner loan commitments over the past year. “

Growth in investor loans was primarily in NSW and Victoria, which grew by 12.1% and 17.4% respectively.

Homeowner loans for first-time buyers fell 0.8%, but remain at high levels due to government programs helping new entrants to the real estate market.

Low interest rates also contribute to the number of new loans incurred for housing.

“First-time homebuyer activity has remained at high levels in NSW and Victoria,” Ms. Keenan said.

“However, the number of first-time home buyers has declined in recent months in Queensland, Western Australia and South Australia, following the shutdown of HomeBuilder initiatives and the Government of state such as the Building Bonus Grant in Western Australia. “

RateCity’s research director, Sally Tindall, said buyer investors were pushing first-time homebuyers out of the market.

RateCity research director Sally Tindall said buyer investors were pushing first-time homebuyers out of the market.  Image: Supplied
RateCity research director Sally Tindall said buyer investors were pushing first-time homebuyers out of the market. Image: Supplied

“Investors are starting to crowd out some first-time buyers, soaring real estate prices are casting a dark cloud over their dreams of home ownership,” Ms. Tindall said.

“As most government incentives end, another 10,000 seats under the First-Time Home Loan Program were opened this week, giving some first-time buyers the opportunity to enter.”

Ms. Tindall also expressed concern that the federal government considering relaxing responsible lending laws could have serious repercussions on the lending market and the amount of debt an individual can take on.

“We have just set a new record for home loans, but the government is moving forward with the removal of responsible lending laws to free up the flow of credit,” she said.

“On the contrary, the government should consider whether we need more restrictions in place to cool the housing market and protect Australian households from over-indebtedness.”

Personal loans were also up, with fixed-term financial loans increasing 5.6% in the month.

The ABS noted that loans were highest for road vehicles and personal investments.

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