Borrowers still looking for a better deal

Home loan demand fell in August, according to new data from the Australian Bureau of Statistics (ABS), suggesting that the housing market’s ongoing correction continues.


October 15, 2018

Home loan demand fell in August, according to new data from the Australian Bureau of Statistics (ABS), suggesting that the housing market’s ongoing correction continues.

The latest Housing Finance data from the ABS reveals that, in seasonally adjusted terms, 51,266 home loans were approved throughout August – down 2.1% from the month prior.

“In August we saw a decline in the number and value of home loans approved. Indeed we have seen the number of dwelling commitments fall by more than 10% in the last 12 months as the market has undergone a correction since peaking this time last year,” said Mortgage Choice Chief Executive Officer, Susan Mitchell.

The data reveals that $30.8 billion worth of dwelling commitments were made over August, a reduction of 0.6% from the month prior in seasonally adjusted terms. This included a 2.7% drop in the value of owner occupied housing commitments to $20.7 billion and a 1.1% fall in the value of investment loans to $10 billion.

This data was supported by CoreLogic’s Hedonic Home Value Index, which revealed that national dwelling values fell 0.3% in August 2018, led by declines of 0.3% and 0.6% in Sydney and Melbourne respectively.

“A number of factors have compounded, placing downwards pressure on home loan demand such as historically high house prices and tightened lending standards which have led to an increase in the cost of borrowing on some loan products. This ultimately has an impact on consumer confidence and the level of borrowing in the housing market, however, demand is relatively high by long-term standards.

“The previous Housing Finance data revealed that in July, there was a notable increase in the number of refinancing commitments – rising 3%. These commitments fell just 0.6% in August suggesting borrowers are still pursuing more competitive home loan deals,” said Ms Mitchell.

Looking ahead, Ms Mitchell said that while we may not see home loan demand grow to the levels we saw this time last year, the Spring selling season could support demand in the short-term.

“This complex housing market means it has never been more important for those looking to buy or refinance into a new loan product to ensure they are seeking expert advice to get financially fit and increase their chances of securing a competitive home loan deal.

“A Mortgage Choice financial adviser can help coach those looking to enter the housing market, through a strategic savings and investment plan, in order to build their home loan deposit. When the time comes to apply for a loan, a Mortgage Choice broker can do all the legwork to find buyers a suitable loan for their unique financial needs,” Ms Mitchell concluded.


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