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Home loan demand falls as values rise

Home loan demand falls as values rise

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Staff Reporter 3 minute read

Demand for home loans dropped again in February, though median dwelling values increased, according to new data from the Australian Bureau of Statistics.

The bureau’s data indicates a 0.2 per cent month-on-month decrease from 54,443 approved home loans in January to 54,427 in February 2018 (seasonally adjusted).

This follows on from a similar trend the month before. Home loans approved in January had also dropped by 1.1 per cent from the 55,161 recorded in December 2017.

Mortgage Choice spokesperson Jacqueline Dearle described the downward trend as “somewhat surprising” as people tend to put their property plans for the year into action in February.

“However, when we consider that the property market has been cooling in recent months, a decline in demand is reasonable,” Ms Dearle said.

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Citing statistics from CoreLogic, the spokesperson noted that median dwelling values for the combined capital cities fell by 0.2 per cent during March. In Sydney and Melbourne, median values slid by 0.3 per cent and 0.2 per cent, respectively.

Meanwhile, the value of all property construction commitments hit $33.5 billion in February, a 1 per cent increase from the previous month. This is compared to the 3.1 per cent month-on-month increase in dwelling commitments recorded in January.

“The value of owner-occupied housing rose by 1.3 per cent to $21.5 billion, while the value of investment loans written rose by 0.5 per cent to $12 billion,” Ms Dearle said.

Despite the slight drop in home loan demand three months in a row, Ms Dearle said that she expects demand to remain at “relatively stable levels”.

Explaining, the Mortgage Choice spokesperson said that the “historically low” interest rates are keeping the cost of borrowing at “affordable levels”.

“In addition, lenders are actively vying for business from both owner-occupiers and investors by offering competitive rates on their home loans,” Ms Dearle said.

The Housing Industry Association (HIA) released a report last week noting that in 2017–2018, the supply and demand for new homes are at the “closest to equilibrium as [they have] been in the last 15 years” on a national level.

The HIA also suggested that if the nation’s population continues to increase at the current rate of 1.6 per cent per year, and household income remains relatively stagnant, an average of 215,123 homes would need to be built every year until 2050 to reach a balance between supply and demand.

A “record” 233,544 dwellings were built in 2016, with new dwelling commencements across Australia exceeding 217,000 in 2017, according to HIA’s estimates.

[Related: Fixed rate demand still sliding]

Home loan demand falls as values rise
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Tas Bindi

Tas Bindi

Tas Bindi is the features editor for The Adviser magazine. She writes about the mortgage industry, macroeconomics, fintech, financial regulation, and market trends.  

Prior to joining Momentum Media, Tas wrote for business and technology titles such as ZDNet, TechRepublic, Startup Daily, and Dynamic Business. 

You can reach her on This email address is being protected from spambots. You need JavaScript enabled to view it..

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