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ABS: Home Lending Largest Rise in 4years

Confidence in the housing markets appears to be building with housing finance figures showing a turnaround following months of decline.

Total lending for the month of July was up 5.1% on the previous month with investor loans up 4.7% and owner occupier loans up 5.3%. Lower interest rates, confidence following the Federal Election and a push by lenders has helped borrowers get back into the market.

Whilst the monthly increase has seen strong gains on the previous month, lending is still well below the same month of last year with Investor loans still down -20% on last year and owner occupiers down -8%.

The improvement in lending is a welcome sign to the regulators who have been closely monitoring the recent interest rate reductions as they battle a weakening economy.

Subject to their being no external shocks, we expect a similar rise in lending over the next 6 months as borrowers return to the real estate market. Tightening supply conditions over the next 6-12 months will then likely lead to above average pricing increases in 2020/2021.