Kathryn Lee - 21 Jan, 2020

ABS data shows growth in housing lending

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New data from the Australian Bureau of Statistics (ABS) has suggested positive signs for the 2020 housing market.

Released last week, November lending data showed a 1.8% rise in the value of new loan commitments (seasonally adjusted).

Contributing to this was a 1.6% rise in new loan commitments for the owner-occupier market.

According to ABS Chief Economist Bruce Hockman, this is the “sixth straight month of growth” for this market.

The data also showed a 2.2% rise in the value of loan commitments for investor lending.

Is our housing market back?

With lenders previously plagued by the fallout of the recent Royal Commission into banking, economists are saying this upward swing could represent the resurgence of our housing market.

Coupled with the high likelihood of an interest rate cut in February, many believe there will be a continuation in the rise of both lending commitments and loan amounts.

Chief economist at IMF Investors, Alex Joiner, tweeted: “Housing finance approvals continue to gather momentum as borrowers conclude that interest rates will be low for an extended period of time,” he said.

“…it won’t be surprising to see credit growth pick up a touch at this rate, and dwelling prices will no doubt continue to rise.”

However, despite the positive overall outlook, the ABS data also showed a downfall in loan commitments to owner-occupier first home buyers, down 0.9%.

This came after a 0.4% fall in October.

According to the ABS, a back-to-back fall such as this hasn’t been seen since January 2019.

First Home Buyer downfall no cause for concern

According to Housing Industry Association (HIA) Economist, Geordan Murray, the recent tumble is no cause for concern.

He says that overall, finance in this segment remains strong, and that in the months leading into November 2019 first home buyer loan commitments were 7.3% higher than 12 months prior.


Currently, first home buyer owner-occupier loans account for 29.7% of the market.

Mortgage Choice CEO, Susan Mitchell, says the consecutive drop could simply be a reflection of the Morrison government’s (now commenced) First Home Loan Deposit Scheme.

The scheme, which began on January 1 this year, allows first home buyers to purchase a home with a 5% deposit and no Lenders Mortgage Insurance (LMI).

“The fall over [November] may be because first-time buyers were holding back from putting their buying plans in action as they waited for the government’s First Home Loan Deposit Scheme to become available,” she said.

However, only time will tell if this is the case.

Canstar finance expert, Steve Mickenbecker, says that although first home buyer results are tracking well, recent price growth in the major cities might see this slow.

“…recent recovery in house prices in Sydney and Melbourne might put the brakes on here,” he said.

The rise of the investor?

Clocking a 2.2% rise in November, HIA’s Geordan Murray believes recent figures could be “an early sign” that investors are “returning to the market”.

Although investment figures are currently half of what they were in 2015, he is optimistic about their future growth.

Further prediction for the 2020 market will be able to be made once the Reserve Bank of Australia makes its rate decision and the ABS’ December lending results are released in February. 

Words by Kathryn Lee


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