Mortgage business logo

SA owner-occupied lending hits high

Lending for new South Australian owner-occupier loans is at the highest level since ABS records began in 2003, with a consumer advocate warning of a pending “perfect storm” for borrowers.

According to Australian Bureau of Statistics data, South Australia saw $1.25 billion in loan commitments for owner-occupier housing during April, a 5 per cent rise on the prior month and a 69 per cent increase on the year before. The rate of lending had lifted after falling in March to $1.19 billion in new loans, following $1.23 billion in March.

Investor loans had also hiked, growing to $355 million in new loans during April from $305 million the month before, and surging by 70 per cent on the year before.

Meanwhile, lending to first home buyers slipped in April, down to 953 new owner-occupier loans from 1,052 in March, but it was still nearly double from the year before (498).

CHOICE chief executive Alan Kirkland has expressed concern around the surge in loans, commenting the signs of economic recovery has masked risks for borrowers.

“Home lending is booming in South Australia. We haven’t seen such startling levels of lending since records began in 2003,” Mr Kirkland said.

“The state faces the perfect storm of rising levels of household debt, ultra-cheap credit, flatlining wages, hidden underemployment and key government support tapering off.”

md discover

SA government data showed median house prices in Adelaide ticked over half a million dollars in the December quarter, before it reached $518,000 in the three months to March. A year before, the median price in Adelaide was $479,000, compared with $476,000 in the first quarter of 2019.

“Families are having to take on increasingly larger debts to simply enter the market,” Mr Kirkland said.

CHOICE has been vocal in opposing the government’s planned repeals to responsible lending obligations, having signed an open letter calling on parliamentarians to retain the laws in their current state. Around 37,000 individuals and 125 community sector organisations have also signed the letter.

“Now more than ever, when credit is cheap and home lending is booming, we need strong safe lending laws to ensure banks don’t sell people into loans they won’t be able to afford down the track,” Mr Kirkland said.

The Senate is due to vote on the legislation when it meets next week, but a number of crossbenchers, including senators Jacqui Lambie, Rex Patrick and One Nation leader Pauline Hanson, have signalled they will not support the bill.

Treasurer Josh Frydenberg, however, has remained firm on the changes.

[Related: WA investor loans hit 5-year peak]

You need to be a member to post comments. Become a member for free today!
Share this article

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

brokerpulse graph

What are the main barriers to securing a mortgage at the moment?