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Mortgage approval values bounce back

ABS data from June has reported an overall increase in lending values, driven by owner-occupiers and first home buyers.

According to the latest Lending to Households and Businesses data from the Australian Bureau of Statistics (ABS), the total value of home loan approvals increased, in seasonally adjusted terms, by 1.3 per cent in June, following a fall of 1.6 per cent in the month prior.

The rise in mortgage lending was largely driven by a 2.4 per cent increase to owner-occupier home lending, recovering from a 2.7 per cent drop in the previous month.

A vast majority (76.1 per cent) of owner-occupier lending was provided to those purchasing established homes, and the number of loans written for established dwellings increased 1.2 per cent on the previous month.

The data also showed that finance commitments for investors increased by 0.5 per cent, the first spike in investor lending for housing since July 2018.

Additionally, the number of mortgages provided to first home buyers (FHBs) also increased by 2.1 per cent, making June the fifth month to see increased FHB lending in the first six months in 2019.

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In regard to the recent spike in home loan values, Ben Dorber, director of financial statistics at the ABS, noted: “Consistent with recent house price movements, the decline in new lending commitments for dwellings has slowed in recent months.” 

Senior economist for the Housing Industry Association Geordan Murray indicated that the June lending results occurred in the same month as the first cut to the official cash rate by the Reserve Bank of Australia (RBA) but said it was likely too close to the event for the results to show a significant effect.

“The first of the two interest rate cuts was announced on the first Tuesday of June. Given the lag between a loan applications and final approval, it is unlikely that the rate cut had a material impact on the figures released today,” Mr Murray said.

“In early July, the RBA cut rate for a second time, APRA finalised the changes to rules for assessing loan serviceability, and the government passed cuts to personal income tax rates.”

“These developments should lead to more positive data as the year progresses.”

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Hannah Dowling

Hannah Dowling is a journalist for mortgage business, the leading source of news, opinion and strategy for professionals working in the mortgage industry.

Prior to joining the team at Mortgage Business, Hannah worked as a content producer for a podcast catering to property investors. She also spent 6 years working in the real estate sector at a local agency. 

Hannah graduated from Macquarie University with a Bachelor of Media and Journalism. 

You can email Hannah at: This email address is being protected from spambots. You need JavaScript enabled to view it.

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