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The value of new home lending has almost doubled since May last year.
New home lending increased by 4.9% from the month prior and a whopping 95.4% or $15.90 billion from May 2020.
While the value of owner-occupier lending only saw moderate month-on-month gains, investor lending has gone through the roof, up $1.07 billion from April, according to new ABS data.
Investor lending has now hit the highest level since June 2015 with $9.13 billion of new loans in May, more than double the value in May last year when COVID was in its early stages.
However, the investor surge comes at the cost of first home buyers, with the number of owner-occupier first home buyer loans dropping for the fourth month in a row in seasonally adjusted terms.
While first home buyer numbers are down, the value of first home buyer lending is up, reflecting Australia’s rising property prices.
Experts thoughts:
Canstar Group Executive, Financial Services, Steve Mickenbecker said,
“The buoyant property market continues to pit first home buyers against investors, and while first home buyers led out of the blocks early last year, they are now being left in investors’ dust.”
Investors took a while to be convinced that property prices coming out of the first COVID-19 lockdown could be sustained, but are now true believers and piling into the market.
The lowest home loan rate available with a 20 percent deposit at 1.99% is available to both investors and first home buyers.
Low rates for investors are surfacing as banks chase market share in the fastest growing segment of the market.
Runaway property prices fueled by investor competition is making it tougher for first home buyers to put together the necessary deposit to get into the market.
First home buyers don’t have investors’ borrowing track record and rightly lack the confidence to sign unconditional contracts, putting them behind the eight ball when a property is hotly contested.
Governments provide support with the First Home Loan Deposit Scheme and stamp duty discounts for first home buyers, but the community expects more. Short of stifling investor demand, meaningful measures would be a huge addition to the already massive budget deficit.”
RateCity.com.au research director, Sally Tindall, said:
“Home lending has again hit a record high with investors surging back en masse”.
Worryingly, the number of first home buyers dropped for the fourth month in a row, as they faced off cashed-up investors and existing homeowners at auctions,” she said.
Sky-high property prices are casting a dark cloud on many young Australians’ homeownership dreams.
However, as a small olive branch from the government, another 10,000 First Home Loan Deposit Scheme places opened this week, offering some eager first home buyers another opportunity to get in.
We’ve just clocked up yet another record high in home lending, yet the government is pushing ahead with the scrapping of responsible lending laws, which it says will free up the flow of credit.
With over $32 billion worth of new home loan lending settled in May, it’s hard to see where the credit crunch is.
If anything, the government should be looking at whether we need more restrictions in place to cool the property market and protect Australian households from overburdening themselves with debt,”
Now is the time to take advantage of the opportunities the current property markets are offering
Sure the markets are moving on, but not all properties are going to increase in value. Now, more than ever, correct property selection will be critical.
You can trust the team at Metropole to provide you with direction, guidance, and results.
Whether you’re a beginner or an experienced investor, at times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that’s exactly what you get from the multi-award-winning team at Metropole.
We help our clients grow, protect and pass on their wealth through a range of services including:
Strategic property advice – Allow us to build a Strategic Property Plan for you and your family. Planning is bringing the future into the present so you can do something about it now! Click here to learn more
Buyer’s agency – As Australia’s most trusted buyers’ agents we’ve been involved in over $4Billion worth of transactions creating wealth for our clients and we can do the same for you. Our on the ground teams in Melbourne, Sydney, and Brisbane bring you years of experience and perspective – that’s something money just can’t buy. We’ll help you find your next home or an investment-grade property. Click here to learn how we can help you.
Wealth Advisory – We can provide you with strategic tailored financial planning and wealth advice. Click here to learn more about we can help you.
Property Management – Our stress-free property management services help you maximise your property returns. Click here to find out why our clients enjoy a vacancy rate considerably below the market average, our tenants stay an average of 3 years, and our properties lease 10 days faster than the market average.
Read more: propertyupdate.com.au