New loan commitments for housing rose 4.6% in January, seasonally adjusted, according to the latest Australian Bureau of Statistics (ABS) data.
The growth was driven in large part by owner occupiers, which charted a 5.0% increase, making January the eighth consecutive month of uninterrupted growth in the sector.
First home buyers (FHB) continued to play their part, with loan commitments to owner occupier FHBs rising 3.2% over the month, resulting in figures up 25.6% from January of the previous year.
“In January, the value of housing loan commitments grew at the fastest rate since the turning point in lending activity in mid 2019,” said ABS chief economist Bruce Hockman.
“The value of new loan commitments for investor housing also strengthened in January, rising 3.6%.”
According to Maree Kilroy, economist for BIS Oxford Economics, this is the first month of data in which the impact of the First Home Loan Deposit Scheme (FHLDS) was reflected.
“With a strong take-up reported by brokers and banks, strength in first home buyer lending is expected to persist over February and March,” she said.
However, Kilroy also highlighted that the data from January predates the effect that anxiety around COVID-19 may have on housing.
“Whilst the COVID-19 outbreak is going to be a major hit to economic activity in 2020, it is yet to show any real impact on the residential property market,” she said.
Even with all lead indicators remaining positive for the property market at the moment, a further RBA rate cut is expected for April, which would take the cash rate to 0.25% and bring owner-occupier mortgage interest rates as low as 2.4%, in Kilroy’s estimation.
“[However], while stimulatory, it is expected that the boost from these rate cuts will be fully neutralised by elevated household anxiety over 2020,” Kilroy concluded.
