Home loan commitments increase after April tumble

The latest data from the Australian Bureau of Statistics found the value of new home loan commitments increased 1.7 per cent to $32.4 billion in May 2022, after a 2.8 per cent drop in April.

While Easter and ANZAC holidays in April contributed to a reduced processing of loan applications, ABS head of finance and wealth, Katherine Keenan, said key lenders have attributed some of the rise in May to the fact they had cleared “processing backlogs”.

“The value of new owner-occupier housing loan commitments rose 2.1 per cent, contributing 82 per cent of the rise in total lending,” she said.

Investor loan commitments also rose 0.9 per cent to $11.18 billion in May, following a fall of 4.8 per cent in April – which broke nine consecutive months of growth.

This revival in investor lending was driven by NSW that saw an uptick of 3.1 per cent and Victoria (up 2.8 per cent). While Queensland, South Australia and the ACT reported falls in investor lending.

The data coincided with the Australian Prudential Regulation Authority’s (APRA) monthly authorised deposit-taking institution (ADI) data, which revealed total residents loans and finance leases at the banks increased by $25.7 billion (or 0.8 per cent) in May, driven in part by “growth in home lending”.

The regulator said banks reported an $8.5 billion (or 0.6 per cent) increase for owner-occupied loans and a $3.3 billion increase (or 0.5 per cent more) in investor lending. 

According to the ABS the value of new owner-occupier home loans rose 2.1 per cent to $21.2 billion. This increase was seen across most of the states and territories, with Victoria recording the highest increase up 6.1 per cent, Queensland went up by 2.5 per cent and South Australia saw a rise of 2.8 per cent.

Western Australia and Northern Territory lagged behind both reporting a drop in loan commitments in May (3.3 per cent and 7.3 per cent, respectively).

Despite the cost-of-living increases pinching first home buyers, the demographic saw an increase in new loan commitments for owner-occupier loans, which increased 2.3 per cent in May 2022. But remained 31.6 per cent down compared to the same time last year.

Overall, first-home buyer owner-occupier loan remained 6.9 per cent higher than February 2020 levels, partly contributed by the pandemic stimulus.

Given the concerns around the construction industry, following several construction collapses, the ABS revealed total construction finance fell 3.5 per cent in May following an 8.5 per cent fall in April.

However, the purchase of property rose 19.5 per cent to $7.23 billion after three consecutive months of falls since January, which recorded $7.69 billion in purchases.

[Related: Positive swings in home lending APRA]