Rate Cuts Spark Rebound In Housing Finance

By Glenn Dyer | More Articles by Glenn Dyer

A 5% increase in home loan lending in August, compared to July surprised a little on the upside yesterday as the two rate cuts from the Reserve Bank seem to have dragged new home buyers, investors and people looking to trade up back to the housing market.

According to figures released by the Australian Bureau of Statistics, the 5.3% jump to a total of $13.25 billion was the biggest percentage rise in three years.

The rise stood out in data showing a 3.9% rise in total lending to households in July.

ABS Chief Economist, Bruce Hockman said in yesterday’s release: “In July, growth in new lending commitments to households was the strongest since October 2014.”

“For the second month in a row, there were particularly strong increases in the level of new lending commitments for owner-occupier and investment dwellings. Despite this recent turn-around, both series remain down from their respective peaks in 2017.”

The monthly total was the largest since November last year and saw the decline in new owner-occupier lending over the year slow to 8.3%, down from more than 18% in the year to June.

New investor finance also rose sharply, lifting 4.7% to $4.64 billion after adjusting for seasonality. But investor lending still remains more than 20% down on a year ago, up from a 24.7% fall over 2018-19.

The percentage increase was the largest since September 2016 and followed a 0.9% gain in June.

The rebound in new housing finance follows a steep rebound in Australian auction clearance rates in recent months, according to data from CoreLogic.

House prices have also risen over the past two months, led by strong price gains in Sydney and Melbourne. But the gains have been at the top end of the market while homes in lower price brackets continue to ease.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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