Largest fall in new loan commitments in 12 months: ABS report

By June 17, 2020 Market Update

The April 2020 Lending to Households and Business figures released today by the Australian Bureau of Statistics show dramatic drop in value of loans for housing, say REIA.

Figures released by the Australian Bureau of Statistics in the April 2020 Lending to Households and Business figures show the value of loans for housing fell by 5.0 per cent in seasonally adjusted terms.

This decrease has been driven by the lack of owner-occupiers’ purchase of existing dwellings, according to the Real Estate Institute of Australia (REIA).

At a Glance:

  • Value of loans for housing has fallen 5 per cent
  • Value of loan commitments has had its largest fall in 12 months
  • Purchase of existing dwellings had largest fall in over a decade

New loan commitments for April 2020. Source: ABS

“The value of new loan commitments for both owner-occupiers and investors displayed the largest fall in twelve months and the purchase of existing dwellings experienced the largest fall in over a decade,” said Mr Adrian Kelly, President of the REIA.

“Not surprisingly ABS reports that lending institutions have indicated that COVID-19 impacts were being seen through both reduced demand from borrowers and tighter lending criteria.

“What is more sobering is that ABS says COVID-19 operational impacts experienced by some lending institutions resulted in a backlog of March housing loan applications being processed in April, which moderated the April fall in loan commitments.

“The number of owner occupier first home buyer loan commitments fell by 3.8 per cent in seasonally adjusted terms but the proportion of first home buyers, as part of the total owner-occupied housing finance commitments was 36.7 per cent.

Mr Kelly said despite the fall in new commitments for first home buyers, the series is 20.2 per cent higher than the most recent low point in December 2018.

“Feedback from agents suggests that worse is yet to come on housing finance figures as restrictions on movements throughout May and caution about the economy impact on activity in the housing market,” said Mr Kelly.

Article writen by Adrian Kelly  –

Photo by Weyne Yew on Unsplash

About The Author
Paul Kounnas

Paul Kounnas

For nearly 40 years, Paul Kounnas has been helping people buy and sell property in and around the Manningham area. In 1993 Paul established Hudson Bond Real Estate and he is recognised as one of the most respected, prominent and knowledgeable members of his profession. A licensed Real Estate Agent and member of the REIV and the International Real Estate Federation (FIABCI), Paul provides regular expert advice and information on all matters relating to real estate.

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