Australian borrowers still looking for a better deal

HOME loan demand fell in August, according to new data from the Australian Bureau of Statistics (ABS), suggesting that the housing market’s ongoing correction continues.

The latest Housing Finance data from the ABS reveals that, in seasonally adjusted terms, 51,266 home loans were approved throughout August – down 2.1 per cent from the month prior.

“In August, we saw a decline in the number and value of home loans approved.

“Indeed we have seen the number of dwelling commitments fall by more than 10 per cent in the last 12 months as the market has undergone a correction since peaking this time last year,” Mortgage Choice chief executive officer Susan Mitchell explained.

The data reveals that $30.8 billion worth of dwelling commitments were made over August, a reduction of 0.6 per cent from the month prior in seasonally adjusted terms.

This included a 2.7 per cent drop in the value of owner occupied housing commitments to $20.7 billion and a 1.1 per cent fall in the value of investment loans to $10 billion.

This data was supported by CoreLogic’s Hedonic Home Value Index, which revealed that national dwelling values fell 0.3 per cent in August 2018, led by declines of 0.3 per cent and 0.6 per cent in Sydney and Melbourne respectively.

“A number of factors have compounded, placing downwards pressure on home loan demand such as historically high house prices and tightened lending standards which have then led to an increase in the cost of borrowing on some loan products.

“This ultimately has an impact on consumer confidence and the level of borrowing in the housing market, however, demand is relatively high by long-term standards.

“The previous Housing Finance data revealed that in July, there was a notable increase in the number of refinancing commitments – rising 3 per cent.

These commitments fell just 0.6 per cent in August suggesting borrowers are still pursuing more competitive home loan deals,” Ms Mitchell said.

Looking ahead, Ms Mitchell said that while we may not see home loan demand grow to the levels we saw this time last year, the spring selling season could support demand in the short-term.

“This complex housing market means it has never been more important for those looking to buy or refinance into a new loan product to ensure they are seeking expert advice to get financially fit and increase their chances of securing a competitive home loan deal.