Nell Matzen - 7 Sep, 2021

Home Loan Commitments Still High According to ABS Data, Despite Rising COVID-19 Numbers

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Despite COVID-19 triggering lockdowns around the country, the Australian Bureau of Statistics (ABS) lending figures have shown Australians are still just as eager to enter the property market or refinance their existing loans. 

The figures show that the Australian property dream is not just surviving but thriving, with a 4.9% increase of new home loans in May compared to April 2021. 

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NAB Executive for Homeownership for Andy Kerr said that the high level of lending activity indicates that confidence in the housing market continues to improve.

“We understand there are headwinds in slower population growth and the impact of rising house prices.”

“However, we expect low rates and government programs like the First Home Loan Deposit Scheme to continue to drive a strong housing market,” he said.

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As predicted, the $32.6 billion worth of new loans was driven by investors returning to the market in droves after a quiet 2020. 

ABS Head of Finance and Wealth Katherine Keenan said that investor loans grew by double digits during May. 

“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.” 

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

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

The increase in investor loans was primarily experienced in Victoria and NSW, rising 17.4% in Victoria and 12.1% in NSW. 

Although first homebuyer owner-occupier loans fell by 0.8% in May, they remain at historic highs thanks to low-interest rates and government incentives and schemes.

Ms Keenan outlined the impact the various government schemes were having on first home buyer activity. 

“First home buyer activity remained at high levels in NSW and Victoria.” 

“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,” she said. 

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The return of investors to the market spells bad news for the first home buyer boom.

According to RateCity Research Director Sally Tindall, investors are muscling first home buyers out of their market thanks to their bigger borrowing power

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

“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,” she said. 

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Ms Tindall was also concerned that the federal government’s new relaxed lending laws could mean for the lending market and individuals stretching their budgets to get into their own homes. 

“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.”

“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,” she said. 

The ABS data also revealed that personal lending was also on the rise, with fixed-term finance loans increasing 5.6% during May. 

Words by Nell Matzen


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