Debbie Shankar - 12 Sep, 2016

Home Loan Lending Increasing in Australia

Scroll Down

Home loan lending is increasing in Australia, as home buyer confidence continues to grow after a cut in the official cash rate. This increase comes after housing experts warning that an oversupply of housing stock exists in capital cities.

Recent Data Shows Rise in Home Buyer Confidence

Figures released by the Australian Bureau of Statistics (ABS) in June 2016, suggest that dwelling finance loans are growing. The number of new dwelling housing loans rose by 2.7%, and construction loans by 2.1%. First home buyer loans totalled 14.3% of all finance approved. Overall, lending volumes for new home lending rose by 2.3% over June. This figure was 6.3% greater than June 2015.

On a state-by-state basis, home loan increases are as follows:

Queensland + 4.3%.

Victoria + 19.1%.

New South Wales +10.8%.

Western Australia + 20.7%.

Northern Territory + 17.7%.

According to ABS data, the total value of dwelling commitments rose to $32 million, a 0.4% increase on May figures. Investment housing loans increased by 0.8%, and owner-occupied housing by 0.2%.

Number of Dwelling Commitments


Commitment Type Total Number Percentage of Change
Owner Occupied Housing 57,247 0.2
Construction of Dwellings 5,745 -0.1
Purchase of New Dwellings 2,677 0.6
Purchase of Established Dwellings 48,825 0.2

Source: Australian Bureau of Statistics (ABS) June 2016

New Home Sales Data

The Housing Industry Association New Home Sales Report, released on August 1, 2016, highlights a change in building trends. While new homes sales have fallen compared to their peak levels 12-months ago, they are on the rise in relation to their greatest decline. This increase signifies that the market is entering a period of readjustment.

Compared to figures recorded in the June 2015 quarter, the June 2016 quarter has seen detached housing sales drop in South Australia by 21.4%, Western Australia by 27.5%, and New South Wales by 7.3%, but increase in Victoria by 17% and Queensland by 7.1%.

However, the HIA report shows that sales of detached homes compared to last month’s data have increased. Nationally sales have grown by 7.2% for detached homes. Multi-unit sales grew by 11.5%, an increase of 4.9% on May 2016 data.

How the Official Rate Cut Will Affect the Housing Market

Real estate agents across Australia are expecting a favourable market this Spring with the Reserve Bank dropping the official cash rate to 1.5%. The latest rate cut is boosting home buyer interest, despite banks not passing on the full amount to consumers. Westpac dropped its rates the most with a decrease of 0.14%; the Commonwealth Bank (CBA) followed with a rate drop of 0.13%. The Australian New Zealand Banking Group (ANZ) decreased its rates by 0.12, and the National Australia Bank (NAB) by 0.10%.

The current variable rates for Australia’s major lenders are as follows:

ANZ – 5.25%

CBA – 5.22%

NAB – 5.25%

Westpac – 5.29%

However, if home buyers are seeking a better rate, then mortgage brokers suggest that they negotiate a better deal or turn to non-bank lenders. Some credit unions and building societies are passing on the full rate cut, which may see these lenders gain a greater share of the market.

More buyers will be looking to extend themselves financially say real estate agents, and more home sellers will seek to put their homes on the market. At present, housing market stock is low, and this is controlling the growth of prices. However, if more sellers put their homes on the market, then price growth should stabilise, making homes more affordable.

The Housing Oversupply

By 2017, Australia is expected to have 24,000 homes too many due to record building booms. According to BIS Shrapnel’s Building Industry Report, released in March 2016, leading the housing oversupply race will be Victoria, with more than 21,000 homes too many.

Sydney will have a shortage of approximately 41,000 homes. However, this is an improvement on 2016 data where this capital has a shortage by more than 53,000 homes.

Want to know more about home loans? Then contact eChoice and find the right home loan for YOU today.

You might also like:

Get your tailored home loan report. Start Now