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Borrowers are back: homebuyer lending rises 10% in July


Red house roof under a blue sky.

This is the biggest month-on-month rise in owner-occupier lending we've ever seen.

The latest ABS lending statistics show a big jump in lending for both home buyers and investors.

The seasonally adjusted figures are for July and show significant increases over June:

  • Owner-occupier lending: up 10.7%
  • Investor lending: up 3.5%
  • First home buyer lending: up 14.4%

In value terms, the total amount of new lending (excluding refinancers switching to new loans) rose from $17.37B to 18.92B.

"This is the largest monthly increase in the history of the [data] series and reflects the easing of social distancing restrictions following the first wave of COVID-19," said President of the Real Estate Institute of Australia Adrian Kelly.

Kelly also noted that while rising over June, investor lending has still seen "a fall of 5.1 per cent for the year."

All states and territories saw rises, apart from the ACT. Even Victoria saw an 8.9% rise in owner-occupier lending (although investment lending there fell 2.95%).

Of course, July was a period of relative easing in pandemic restrictions in that state. The current stage four lockdown, which affects all real estate activity in Melbourne, didn't take effect until 2 August. A drop in the Victorian figures in the next release seems inevitable.

What does this all mean for borrowers and buyers?

The data shows that the property market is recovering as COVID-19 restrictions have eased. Some kind of rebound was to be expected, as months of buyer and seller activity was put on hold to combat the pandemic.

But given how dire some property predictions have been, July's data is a very positive sign. Consider that the total value of new loan commitments in July 2019 was $16.92B. And now it's 11.8% higher at $18.92B.

The surge in first home buyers is evidence that the historic low-rate environment is motivating people to buy and suggests that government grants and schemes such as HomeBuilder and the First Home Loan Deposit Scheme are having an effect.

The growth in investor activity is a sign of increasing confidence too, although this segment of the market is still down on this time last year.

If you're looking to switch to a lower rate, check out our refinancing guide or compare the latest rates. If you're looking to buy your first place, learn more about first home buyer schemes, grants and loans.

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