Housing finance figures show green shoots – good news for business too

AUGUST 14, 2019

The June 2019 Lending to Households and Business figures released last week by the Australian Bureau of Statistics show increases in new lending commitments for owner occupier and investor dwellings.

The value of new lending commitments to households rose 1.3% in June 2019, seasonally adjusted, according to the ABS figures. The rise in new lending to households in June follows a 1.6 fall in May 2019.

Director of Financial Statistics, Ben Dorber said: “Consistent with recent house price movements, the decline in new lending commitments for dwellings has slowed in recent months.“ 

“In June we saw rises in new lending commitments for both owner occupier and investor dwellings for the first time in over a year."

There were rises in new lending commitments for owner occupier dwellings for all states but falls for the territories. The rise in new lending commitments for investment dwellings was driven by the first rise in New South Wales since April 2018 (up 2.4%).

The number of loans to owner occupier first home buyers rose 2.1% in June and has now recorded increases in five of the six months to start 2019.

REIA President Adrian Kelly said, “The June figures reflect the post-election boost in confidence following the removal of the uncertainty around property taxation. With two interest rate cuts and a softening in APRA requirements June will mark an upturn in market activity.”

Tim Brown, Manager of Our Broker said, the improvement in lending commitments indicate that interest rates and competition amongst lenders for new business is certainly helping consumers look at alternatives for investment. Tim added, “Borrowing at 3.5% and getting a yield of 5% or more in some capital cities means potentially you are positively geared.”

In other lending news, personal finance rose 4.9% in June following a 0.2% fall in May, according to the ABS while in trend terms, the value of new lending commitments to businesses rose 1.1% in June and is up 8.2% since June 2018. “These results are not surprising given there is more available sources of finance for businesses such as alternative lenders and invoice and cash flow lending, which are lifting the numbers,” says Tim Brown.