The figures come in the Australian Bureau of Statistics’ (ABS) lending indicators data for January 2021, which shows that Australia continues to report record-breaking mortgage activity.
New loan commitments (seasonally adjusted) rose by 10.5 per cent in January 2021, to $28.8 billion.
The increase was driven by multiple segments, including owner-occupiers (including first home buyers (FHB), and investors.
Owner-occupiers continue to drive the majority of new applications.
New loan commitments for owner-occupiers increased by 10.9 per cent in January 2021 to $22.1 billion, the highest monthly figure on record.
It represents a 52.3 per cent increase on the same period last year.
Meanwhile, new investor loan commitments rose by 9.4 per cent to $6.6 billion, the largest increase since September 2016, according to the ABS. Victoria led the charge, with investor commitments rising by 12.9 per cent in January 2021, followed by NSW (6.7 per cent) and Queensland (5.5 per cent).
According to ABS head of finance and wealth Katherine Keenan, investor lending has rebounded by 62.4 per cent since it reached its 20-year low in May 2020.
In addition, the ABS data shows that new loan commitments for the purchase of existing dwellings rose by 12.5 per cent to $15.0 billion in January 2021, a 38.7 per cent increase since January 2020.
Meanwhile, commitments for the construction of dwellings rose by 15.7 per cent to $4.07 billion, a 141 per cent increase since January 2020, which the ABS has attributed to the introduction of the HomeBuilder grant in June 2020.
In January 2021, the number of owner-occupier FHB loan commitments rose by 9.6 per cent, reaching the highest level since May 2009 (when there was similar rapid growth driven by the temporary tripling of the First Home Owner Grant in response to the global financial crisis).
Compared with January 2020, there was a 70.8 per cent rise in owner-occupier FHB loan commitments.
Commenting on the figures, Ms Keenan said: “Since the HomeBuilder grant was introduced in June 2020, there have been record rises in the value of construction loan commitments.”
“Loan applications made late in 2020 (prior to the reduction of the HomeBuilder grant on 1 January 2021), contributed to the strong rise in January’s construction loan commitments of 15.7 per cent.”
Housing Industry Association economist Angela Lillicrap said that confidence in the property market has been increasing since the announcement of the HomeBuilder scheme.
“The increase in lending in January coincides with the surge that was seen in HIA’s New Home Sales in December. Households rushed to finalise contracts to build a new home before the end of the 31 December 2020 deadline to access the $25,000 grant,” Ms Lillicrap said.
“The number of construction loans to owner-occupiers in the three months to January 2021 is 45.8 per cent higher than the previous quarter and is more than double the same time the previous year.
“Households have changed their spending habits in response to the COVID-19 interruptions. Many have diverted funds that would have typically been spent on travel and entertainment into improving their homes.”
According to HIA’s analysis of the ABS data, the value of loans for alterations and additions in the three months to January 2021 was 40.8 per cent higher than the same time the previous year.
“Investors are also returning but were more active in the market for established dwellings. The value of lending to investors increased by 17.6 per cent in the three months to January 2021 from the previous quarter,” Ms Lillicrap said.
“Low interest rates, rising house prices, higher savings and a demographic shift in demand towards detached housing and regional areas should ensure ongoing demand for new homes into 2021.”
Bank loan portfolios record modest rise
The latest monthly authorised deposit-taking institutions statistics (MADIS) for January 2021 by the Australian Prudential Regulation Authority (APRA) has revealed that both owner-occupier lending and investment loans had increased moderately.
“This is in line with the continued broad-based increase in national house prices and market activity, driven by strong demand for detached dwellings,” APRA said.
Across the major banks, the Commonwealth Bank of Australia had recorded the biggest increase in its mortgages portfolio, increasing from $466.2 billion in December 2020 to $467.9 billion in January 2021.
This was driven by owner-occupier segment, which had grown from $307.0 billion in December 2020 to $308.7 billion in January 2021, while the investor portfolio had remained stable at approximately $159.2 billion.
ANZ’s mortgages portfolio remained stable across segments, at $262.2 billion in January 2021, with the owner-occupier segment recording a marginal increase from $175.0 billion in December 2020 to $175.3 billion in January 2021, while its investment portfolio increased from $87.2 billion to $87.4 billion.
Meanwhile, NAB’s mortgages portfolio recorded only a marginal increase from $260.6 billion to $260.8 billion during this period, with the owner-occupier segment increasing from $158.7 billion in December 2020 to $159.4 billion in January 2021. However, the investor segment decreased slightly from $101.9 billion in December 2020 to $101.3 billion in January 2021.
A moderate increase in both the owner-occupier and investor segments drove a rise in Westpac’s mortgages portfolio from $405.7 billion in December 2020 to $406.6 billion in January 2021.
The owner-occupier portfolio increased from $229.4 billion to $229.9 billion, while the investor segment grew from $176.3 billion to $176.7 billion.
[Related: Mortgage stress at 3-year lows: research]
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Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.