First home buyers back at highest level in almost a decade

New data from the Australian Bureau of Statistics (ABS) has revealed that home loan demand rose in November 2019.

While lending improved overall the figures show first home buyers are back with a bang, posting a 19.71 per cent increase in the value of new owner-occupier loans taken out in November, year on year, in seasonally-adjusted terms.

This is the highest level of new lending for first home buyers since October 2009 – almost a decade.

Interestingly, the ABS data reveals there was a decline in the number of loan commitments to first home buyers throughout the month of November, however the value of loans to first home buyers is up 2.1% over the month and almost 20% year on year.

Mortgage Choice Chief Executive Officer Susan Mitchell said,

“The fall over the month may be because first-time buyers were holding back from putting their buying plans in action as they waited for the Government’s First Home Loan Deposit Scheme to become available in January,”

Overall, the total value of new home loans jumped 5.9 per cent year-on-year in November in seasonally-adjusted terms.

New owner-occupier loans continued to grow gradually, increasing 9.97 per cent year on year.

According to the ABS, 39,661 home loans to owner-occupiers were approved throughout the month of November.

Investor lending still slow

On the other hand lending to investors slipped back slightly in November, with the value of new loans falling 3.24 per cent year on year.

This isn't because of lack of investor interest - they're still finding it hard to convince the banks to lend them money.

Notes: Seasonally adjusted figures. Figures exclude refinancing.

Source: ABS lending to households and businesses statistics for November 2019, released 16 January 2020.

Paul Marshall, chief executive of RateCity.com.au, said first home buyers were taking the bull by the horns.

“First home buyers have made a comeback in the past year, with close to 20 per cent more borrowing compared to the year before, as the stars aligned for them,” he said.

“Three RBA rate cuts, a housing market that had lost some steam, and changes to serviceability increased the borrowing capacity for some people – a perfect storm for first homebuyers.

“November saw the highest level of new borrowing on record since October 2009 – around the same time the governments’ first home owner boost ended.

“While we haven’t returned to the peak of first home buyer levels, we’re likely to see more buyers continue to surge into the market this year, particularly helped along by the first home loan deposit scheme,” he said.

About Michael Yardney Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.