July 11, 2016
Home loan demand has suffered a slight drop, new data from the Australian Bureau of Statistics has found.
According to the latest data, 56,648 home loans were written through the month of May – down 1.0% from 57,224 in the previous month.
Mortgage Choice chief executive officer John Flavell said the slight drop in home loan demand could be attributed to the significant fall in the number of loans approved for the construction of new dwellings.
“Just over 5,600 home loans were approved for the construction of dwellings in May – down 2.7% on April,” he said.
“And it wasn't just construction demand that suffered a fall, with the number of home loans approved for the purchase of established dwellings falling 0.9% over the month of May.”
But while the number of home loans written throughout the month dropped slightly, the total value of all home loans improved.
“The value of all dwelling commitments written through May was $32.27 billion – up 1.0% on April,” Mr Flavell said.
“Of course, with data from Core Logic showing that property values across the combined capital cities continue to climb month after month, I am not surprised to see an increase in the value of all home loans written.”
According to research conducted by CoreLogic, property values rose 1.6% across the combined capital cities over the month of May.
“The latest data from Core Logic found property values also rose in June – surging 0.5% across the combined capital cities.
“With that in mind, I wouldn't be surprised to see the value of all home loans written rise again next month.”
Mr Flavell went onto say that he expects the property market to remain relatively robust over the coming months, especially as May's rate cut starts to filter through to the market and potential borrowers.
“With many of Australia's lenders passing on the Reserve Bank's rate cut in May, the cost of borrowing has become more affordable than ever before – which will help to keep heat in the market.”