Home loan approvals drop slightly in February 2021

New housing loan commitments edged down in February 2021, but still remain close to record levels.

The latest Australian Bureau of Statistics (ABS) loan indicators data for February shows a 0.4% drop in new loan approvals, seasonally adjusted, to a total of $ 28.6 billion.

This is the first drop since May 2020, and recent surges in loan commitments ensure that lending remains extremely high despite the setback. go to payday champion and try for free

According to Katherine Keenan, head of finance and wealth at ABS, loan commitments still remain 55% higher compared to February 2020 for homeowners.

“February’s decline was driven by reduced loan commitments for existing homes, although the value of those loan commitments remained 39.7% higher than in February 2020,” Ms. Keenan said.


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Basic criteria: a loan amount of $ 400,000, variable, fixed, principal and interest (P&I) mortgage loans with an LVR (loan to value) ratio of at least 80%. If the listed products have an LVR

So during owner occupied loans decrease of 1.8% over the month, investment loan rose 4.5% to 31.6% above its level of the previous year.

Construction loan increased 4.4% for new homes as more than 10,000 were approved, representing a huge annual increase of 147% and 165.6% in the value and number of new constructions respectively.

“The value of loan commitments for new home construction increased 4.4%, continuing a period of record increases since July 2020. Although the HomeBuilder grant, introduced in June 2020, was reduced from January 1 2021, it was made more widely available to borrowers in New South Wales and Victoria through higher price caps for new construction contracts.

“The time taken to process home loans meant that construction loan applications made in late 2020, before these changes, were also contributing to loan commitments reported in February.”

First-time homebuyers are falling too

Loan approvals for first time home buyers also fell for the first time since May 2020, after hitting a 12-year high last month.

The number of homeowner first-time home buyer loan commitments fell 3.3% to 16,117 in February 2021, but remains close to these historically high levels, up 65.8% year-on-year. other.

First-time buyers now account for 35.1% of all owner-occupied loan commitments, up from 36.5% the previous month.

More first-time buyers seem to be investing first (i.e. rental investment), with the number of these approved investors increasing by 4% over the month.

Housing approvals soar

As loan approvals plummeted in February, yesterday’s data on ABS housing approvals told a different story.

The number of approved dwellings increased 21.6% in February (seasonally adjusted), after declining 19.4% in January.

Approvals of private homes increased by 15.1% and ABS director of construction statistics Bill Becker said this surpassed the previous record set in December 2020.

“Since the introduction of the homebuilder subsidy in June 2020, approvals of private homes have increased by almost 70%,” he said.

Townhouse and apartment approvals jumped 45.3% after a nine-year low in January.

The value of the total approved building increased by 23.3%, in seasonally adjusted terms.

While ABS attributes these increases to Builder, Matthew Hassan, Senior Economist at Westpac, said:Its monthly impact is difficult to pinpoint.

“Grants available under this program were reduced from $ 25,000 to $ 15,000 in early 2021, with the move likely representing the 11.8% withdrawal of single-detached home approvals in January. At the same time, however, certain qualification criteria, notably start-up deadlines, have also been relaxed, widening the eligibility conditions, ”said Hassan.

“The entire program expires on March 31, although the deadline for submissions has been extended to April 14 (these must still be for contracts signed before March 31).

“We can only assume that the program was still generating substantial approval activity in February, and any associated looseness and weakness are yet to come.

“The exact date he will arrive and his size remains very uncertain.”

Overall, Mr Hassan said the housing recovery in Australia continues to exceed expectations “at every turn.”

“February’s rebound is clearly surprising and locks in a stronger near-term outlook for new buildings. However, we remain cautious of the pullback effects associated with the HomeBuilder program in the months to come,” he said.

The entire market was not taken into account in the selection of the above products. Instead, a smaller part of the market has been envisioned, which includes retail products from at least the Big Four banks, the top 10 customer-owned institutions and Australia’s largest non-banks:

Products from some vendors may not be available in all states. To be considered, the product and price must be clearly published on the product supplier’s website.

For the sake of full disclosure, Savings.com.au, Performance Drive, and Loans.com.au are part of the Firstmac group. To find out how Savings.com.au handles potential conflicts of interest and how we are paid, please click on the links on the website.

*the Comparison rate is based on a loan of $ 150,000 over 25 years. Please note: this comparison rate is only true for this example and may not include all fees and charges. Different terms, fees, or other loan amounts may result in a different comparison rate.

About Jessica Zavala

Jessica Zavala

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