First home buyers ‘active’ during March

The home lending data released by the Australian Bureau of Statistics (ABS) revealed new home loan commitments rose 1.6 per cent to $33.3 billion over March, which followed a decline in February of 3.5 per cent.

The value of new owner-occupier loan commitments rose 0.9 per cent to $21.6 billion in March, 2.2 per cent lower than the same time last year, with growth recorded for the purchase of existing dwellings, newly erected dwellings and for alterations and additions.

The increase in the value of owner-occupier loan commitments was reported in all states and territories.

First home buyers remained active in the market; following falls in January and February, the number of new loan commitments to owner-occupier first home buyers rose 4.2 per cent (417) in March, which was 32.8 per cent lower than the near-record high a year ago, the report said.

All states saw an increase in first home buyer activity, except Tasmania, with the ACT seeing an increase of 44.2 per cent.

ABS head of finance and wealth Amanda Seneviratne said the reduced first home buyer lending over the past year partly reflects an unwinding of COVID-19 related incentives such as HomeBuilder.

With the cash rate now on its upward bend, following the Reserve Banks of Australia’s decision to raise the cash rate to 0.35 per cent, banks are reflecting those costs by raising their interest rates, which could take months to reflect in home lending data – according to economists.

Investor lending steady

The value of new investor loan commitments reached a record high of $11.7 billion in March, a “key contributor” to the rise in the value of new housing loan commitments, said Ms Seneviratne.

“With the exception of February 2022, the value of investor loan commitments has had monthly increases since November 2020,” Ms Seneviratne said.

In March, increases were reported for all states and territories, with high proportional increases in Queensland (6.7 per cent), South Australia (8.5 per cent), Western Australia (5.9 per cent), the ACT (14.9 per cent) and the Northern Territory (32.4 per cent).

Lending for renovations also reached a new record high in March, over $600 million. This is up by 8.6 per cent for the month and three times the level seen pre-pandemic.

After taking a 40.2 per cent plunge in February, construction lending regained some ground with an increase of 23.6 per cent in March to $2.8 billion.

[Related: All 4 major banks pass on rate rise to borrowers]