Seasonal factors behind drop in home loan demand

Home loan demand has fallen for the fourth consecutive month, according to new data from the Australian Bureau of Statistics.


May 11, 2018

Home loan demand has fallen for the fourth consecutive month, according to new data from the Australian Bureau of Statistics.

The latest Housing Finance data found that 53,017 home loans were approved throughout March, down 2.2% from the previous month.

“March was the fourth consecutive month that we saw a drop in the number of home loans approved,” Mortgage Choice chief executive officer Susan Mitchell said.

“Not only did the number of home loans approved take a tumble, but there was a decline in the value of all dwelling commitments.

“The data shows that $31.9 billion worth of dwelling commitments were made over March, a decline of 4.4% from February.

“The value of investment loans saw quite a significant drop, falling 9% to $10.9 billion in February. Similarly, the value of owner-occupied housing loans fell 1.9% to $21 billion.

“The decline in home loan approvals and the value of dwelling commitments isn’t a surprise as this correlates with what we’ve been seeing in the housing market at the moment.

According to the latest CoreLogic figures, median dwelling values for the combined capital cities fell 0.3% over April.

In particular, median values in Sydney and Melbourne both dropped 0.4%.

“While we have seen a slight drop, home loan approvals remain strong by historical standards,” Ms Mitchell said.

“We are now heading into the cooler months, which is a typically quiet period for the housing market, but we expect demand to remain relatively strong.

“Interest rates remain at historically low levels so it is a good time for home buyers to achieve their goal of property ownership.

“In addition, the Australian Prudential Regulation Authority announced in April that it was scrapping its 10% cap on investment loan growth and this may mean that we see property investors make a comeback.”

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