The recently released May 2019 Lending to Households and Business figures by the Australian Bureau of Statistics show the number of loans for housing, excluding refinancing, continues to decline, but at a slower rate.

“This decline in home loan demand is unsurprising when you consider the broader context of the macro environment at the time," said Mortgage Choice Chief Executive Officer, Susan Mitchell.

"Leading up to May, there was still a lot of uncertainty in the market in the lead up to the federal election, and property prices continued on their downward trend, albeit at a slower pace than in preceding months. With this in mind, I would not have expected to see an increase in demand from borrowers."

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Mortgage Choice Chief Executive Officer, Susan Mitchell. Source: Mortgage Choice

Ms Mitchell added, “Pleasingly, the ABS data revealed that the number of loans to first home buyers increased almost 20% over the month of May, and while the data showed there was a 7% decline year on year, the new data suggests that sentiment amongst first home buyers is improving."

According to the ABS, 46,600 home loans to owner-occupiers were approved throughout the month of May – a reduction of 0.1% excluding refinance and a reduction of 12.4% year on year.

At a glance: 

• The recently released May 2019 Lending to Households and Business figures by the Australian Bureau of Statistics show the number of loans for housing, excluding refinancing, continues to decline, but at a slower rate.
• The ABS data revealed that the number of loans to first home buyers increased almost 20% over the month of May, and while the data showed there was a 7% decline year on year.
• Ms Mitchell, said that looking ahead, there appears to be light at the end of the tunnel for the property market as the ABS data supports other indicators that the housing market correction is stabilising.

“Overall the figures for May 2019 show, in trend terms, that the number of owner-occupied finance commitments, excluding refinancing, decreased by 0.5 per cent – the twenty-first consecutive month of decreases and the lowest since August 2012,” Real Estate Institute of Australia (REIA) President Adrian Kelly said.

“The value of investment housing commitments, excluding refinancing, decreased by 1.5 per cent in May. This is down 27.8 per cent from a year ago and is at its lowest level since March 2009.

“The number of loans to first home buyers increased by 0.8 per cent and is the highest since November 2018 whilst the proportion of first home buyers, as part of the total owner-occupied housing finance commitments increased in May to 18.8 per cent from 18.2 per cent in April," he said.

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REIA President Adrian Kelly. Source: REIA

“Whilst the total number of finance commitments for May show a continuing, but modest, decline it needs to be remembered that the federal election was held in the middle of the month with considerable uncertainty regarding the outcome and concern about changes to property taxation and its impact should there be a change in government." 

Mr Kelly added that with the post-election boost in confidence in the real estate market as evidenced by higher levels of enquiry, two cuts in interest rates and changes in APRA’s requirements in May will most likely mark the bottom of the lending cycle.

Ms Mitchell, concluded, “Looking ahead, there appears to be light at the end of the tunnel for the property market as the ABS data supports other indicators that the housing market correction is stabilising.

"Home loan demand and national dwelling values have faced many headwinds since peaking in late 2017 but the outcome of the federal election and two subsequent rate cuts since this latest issue of data from the ABS could help paint a different picture for the property market going forward.” 

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