Lending update – February 2021

The home loan market is continuing its post COVID recovery with new lending increasing again in December for the seventh consecutive month.

The total value of new lending excluding refinancing rose 8.6%. Owner-occupiers make up the majority of these figures and are up a total of 38.9% over the past 12 months. Purpose-wise, lending for construction is also on the increase with a steady 17.1% increase over last month.

All this new lending appears to be buoyed by lowest ever interest rates, with many lenders offering fixed rates to owner-occupier borrowers that are below 2%. Many borrowers have commented that because repayments are so low, they can afford to borrow a little extra and purchase a property that is a little bigger and/or more expensive. However, not all borrowers are using the lower interest rates to borrow more. Many are using the opportunity to contribute additional repayments to the loans or offset accounts and repay them ahead of schedule. Figures published by Treasury indicate that household savings have increased by approximately $200 billion over the course of the COVID crisis. Aside from not being allowed out to spend their hard-earned money, many Australians cite concerns about job security for their increase in savings.

Media discussion on the housing market seems to be centred around the uplift in house prices in comparison to units where house prices in the month have risen by 1.1% and units by only 0.2%. The 2020 work-from-home revolution appears to be inspiring Australians to move further afield and away from the major CBD hubs, given they no longer need to make the regular commute to work.

Please contact the Infocus Lending Advisory for any questions or further information regarding your mortgage and lending requirements.

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