Mortgage approvals surge as first home buyers flock to the market

The housing market continues to withstand the shock of the coronavirus pandemic, with new data from the Australian Bureau of Statistics (ABS) showing the number and value of home loan commitments rising to record highs in August.

According to the latest Lending Indicators report, the total value of home loan commitments rose by 12.6% in August to $21.3 billion, marking the highest monthly increase in the series’ 18 year history.

Owner occupiers made up the lion’s share of approvals, with first home buyers accounting for 34.2% of commitments among this group. The ABS data reveals that approvals for first home buyers surged by 18.4% in value and 17.7% in number over August.

To its credit, the government’s HomeBuilder scheme seems to be driving demand for new dwellings, with owner occupier loans for construction purposes increasing by 22.9% over the month and by 34% over the year.

While the ABS notes that August commitments reflect demand from June and July, before a second wave of infections forced Victoria into lockdown, the volume of approvals demonstrates the housing market’s resilience to COVID-19 so far.

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Mortgage Choice CEO Susan Mitchell said that a number of policy measures are helping to prop up the housing market, with the rise in home loan commitments expected to continue in the near term.

“The recent announcement of changes to responsible lending will increase access to credit for Australians seeking a home loan and go a long way to reducing red-tape for many home loan applicants,” she said.

“Monetary policy easing from the Reserve Bank continues to support historic home loan interest rates and the Federal and State Government grants and schemes will play an important role in supporting buyer demand.”

According to the ABS, the total value of investor loans increased by 9.3% to just over $5 billion over August, however this remains 4.6% lower than last year. 

Rising vacancy rates and slowly dipping rents have led many investors to retreat from the market, opening up opportunities for first home buyers who usually compete with investors for housing stock on the lower end.

For more property and lending insights, visit our home loan statistics page. And if you’re on the market for a home loan, browse our home loans comparison page, where you’ll be able to filter your search by rate and type.

Home loan comparisons on Mozo - last updated 11 August 2022

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