In March, the Australian home loan market saw a significant 3.1% rise in new lending, totalling $27.64 billion, according to the Australian Bureau of Statistics. The rise was mainly driven by first-home buyers and investors eager to enter the market before potential rate cuts and rising property prices.
“The housing market returned to boom conditions in March with total housing lending up by $839 million or 3.1% for the month,” said Steve Mickenbecker (pictured above), a finance expert at Canstar.
First-home buyers were particularly active, with their borrowing up by 4.4% from the previous month, reaching $5.19bn. Their year-on-year increase was an impressive 17.9%.
“Fear of missing out as house prices rise is driving first home buyers to take the plunge,” Mickebecker said.
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Investment property loans also saw a significant rise, increasing by 3.8% from February and an astonishing 31.1% from the previous year. The total value of new loans for investors in March was $10.17bn.
“Rising house prices and an expectation of lower interest rates are encouraging investors into the market in gold rush proportions,” Mickebecker said.
The dominance of the big four banks in the lending market increased, capturing 74.08% of new loans in March, up from 69.8% in the same month the previous year. This trend is even more pronounced among investors, with 75.35% of new loan commitments going to major lenders.
“The last two years have seen the big banks strike back, lifting their share of the market by 4.3%,” Mickebecker said.
Despite the surge in new loans, refinancing activity dipped, with the value of loans switched to a new lender down by 2.5% from February.
Mickebecker urged borrowers to seek better deals despite the allure of big brands.
“While some borrowers aren’t waiting for the Reserve Bank to instigate a rate cut, the message to other borrowers is don’t wait, make the cut happen for yourself,” he said.
For more details on the ABS lending indicators, visit the ABS website.
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