FHB loans reach new heights in March

According to the Australian Bureau of Statistics’ (ABS) Lending Indicators report for March 2020, the value of new loan commitments for owner-occupier (OO) first home buyers rose to its highest level in a decade (in seasonally adjusted terms).

The data showed that $4.2 billion of finance was written for new owner-occupier first home buyers (FHBs).

This represents a 40 per increase on the prior comparative period (when $3.0 billion of OO FHB loans were written) and an increase of 2.5 per cent on February’s figures.

The data continues the trend of an ever-increasing value of OO FHB loans being written in recent times.

Indeed, the March figures represent the highest value of FHB loans written in a month since October 2009 (when $4.28 billion of OO FHB loans were written) – most likely fuelled by the record-low interest rate environment, the government’s First Home Loan Deposit Scheme and cashback offers from lenders.

However, while there was $4.2 billion of OO FHB loans written in March, this was not a decade high for the number of loans written. 

In March, the ABS found that 9,890 FHB loans had been written. While this was the largest number of loans written for this segment in the year 2020 thus far, it is down on the number written between October and December last year.

The largest volume of OO FHB loans were written in Victoria (2,981), while the highest value of OO FHB loans were in NSW (totalling $1.3 billion).

Mortgage commitments rose in March

Overall, the ABS found that the value of all new loan commitments for housing rose 0.18 per cent in March, seasonally adjusted.

In total, $19.44 billion of new mortgages were written (excluding refinancing).

The value of new loan commitments for owner-occupier housing rose 1.2 per cent, while investor housing fell 2.5 per cent.

ABS chief economist Bruce Hockman commented: “New loan commitments for housing were steady in March despite escalating COVID-19 restrictions. March loan commitments largely reflected loan applications submitted in February or the first half of March before major restrictions were introduced.

“Some lending institutions reported a slowdown in new loan applications towards the end of March."

[Related: Coronavirus clouding lending outlook: ANZ]