Home buyer loans increased slightly in February 2019, according to the first figures published from the time of the financial services royal commission’s final report.
However the amount of the loans approved over the month remains much lower compared to last year.
Prospective homebuyers have experienced more difficulty in securing loans over the last couple of years than in the past because the bank regulator’s crack down on lending requirements, specifically to investors and riskier borrowers.
The highlight of 2018’s financial services royal commission also revealed loans approved to people with unreported living expenses. Following the hearings, banks implemented stricter rules about verifying borrowers’ expenses. There were even accounts of borrowers getting rejected due to the Uber Eat habits.
The value of home loans for residential properties, not including refinancing, increased 2.7% to $17.64 billion in February, versus the January figures.
The small growth follows the release back on February 4 of the royal commission’s final report.
However, household loan values remain 18.6% lower than in February 2018.
Investment property loans rose 0.9%, but remains 29.1% lower than the year-ago period.
Loans for owner-occupiers rose 3.4% but dropped 13.9% from 2018.
Economists are saying that there are tentative signs of more demand for borrowing, and banks may be a little more inclined to lend but warned against over analysing one month of data following the declines over the last one to two years. Also be aware that minor growth follows the increase in auction clearance rates in Sydney and Melbourne from their declines in late 2018 and that clearance rates hitting roughly 50% could be a sign of more price declines in 2019.
According to senior economist in the banking sector, movements in home lending are likely a good major sign of the path of housing values. One upbeat moth is too early to say that the weakness in housing values are ending because when figures are joined with the slight declines in housing prices in March, it could mean the most severe decline are over.
Loans for first-time home buyers posted their biggest share of loans to owner-occupiers in six years, at 27.1%.
However, loans for first-home buyers remain down from last year, though a more moderate level than other owner-occupier loans.
According to state, NSW loans rose 5% in February but remain down, at 23% from last year. Loans in Victoria were up 2% for the month but dropped 21`% over the year.
Now that the election is over, we are noticing changes in our local market with more activity from both sellers and buyers equally showing more confidence in their decisions.