The ABS released the Lending Indicators data for the month of August 2024 today, which provides the latest statistics on housing finance commitments.

“This increase in lending comes off a very low base, with lending for new home purchase and construction remaining about the lowest levels since 2002,” added Mr Reardon.

“Market confidence in new home building has been improving with a pause in interest rate changes for eleven months, low levels of unemployment and an acute shortage of housing.

“First home buyers are increasingly active as buying a home provides protection from the acute shortage of rental homes. The Government should be looking at removing the restrictions that prevent many first-time home buyers from getting a loan.

In its recent submission to the Senate inquiry into the financial regulatory framework and home ownership, HIA identified that a decade of additional costs has restricted competition among banks and made it increasingly expensive for them to lend to first home buyers. 

“A decade of increased prudential restrictions has reduced competition among banks and added additional barriers to first home buyers gaining access to a loan. 

“HIA has recommended that the Government should establish an RBA-style Board to oversee APRA to balance the goals of financial system stability and homeownership.

“This should include a RBA style target for mortgage arrears. 

“Just as zero inflation is not the RBA’s goal, zero mortgage arrears is an unattainable and undesirable goal for APRA.

“Mortgage arrears in Australia have remained exceptionally close to zero, even though the GFC and the pandemic. Yet, APRA continues to impose additional constraints on lending, competition among banks and thereby restricting housing supply.

“The problem is that ongoing regulations have forced banks to eliminate much of the flexibility and competition in the mortgage market that made home ownership accessible for households with variable access to capital, such as first home buyers.

“Ensuring that home ownership remains an attainable goal for Australian households is an equally important objective that has not received adequate recognition among financial regulators. 

“Banks should be making the decision on who is able to service a mortgage, not the Australian Government. Banks are well placed to make this assessment and are protected from delinquency through mortgage insurance,” concluded Mr Reardon.

The number of owner-occupier loans issued for the purchase or construction of a new home in the three months to August 2024 increased by 34.4 per cent in the Northern Territory (from a very low base), followed by Western Australia (+27.1 per cent), the Australian Capital Territory (+26.8 per cent), Queensland (+24.8 per cent), South Australia (+16.8 per cent) and Tasmania (+3.0 per cent). The two largest states recorded a decline over the same period, led by Victoria (-5.2 per cent), followed by New South Wales (-3.7 per cent).

Additional data:

• The number of loans issued to owner-occupiers for the month rose by 4.1 per cent to 31,490. This leaves owner-occupier lending in the three months to August 2024 lower by 0.7 per cent compared to the previous three months but 5.9 per cent higher than at the same time the previous year.
• The number of loans issued to investors for the month fell by 4.0 per cent to 19,340. This still leaves investor lending in the three months to August 2024 up by 5.5 per cent compared to the previous three months, to be 21.4 per cent higher than at the same time the previous year.
• There were 29,770 loans issued to first home buyers in the three months to August 2024. This is 0.7 per cent lower than the previous quarterly period but 8.3 per cent higher than at the same time the previous year.
• The number of owner-occupier loans issued for the purchase and construction of a new home fell by 0.5 per cent in the month. This leaves lending in the three months to August 2024 0.1 per cent lower than in the previous three-month period but 9.1 per cent higher than at the same time the previous year.
• The number of investor loans issued for the purchase and construction of a new home fell by 10.6 per cent in the month. Investor lending for new homes in the three months to August 2024 was still 7.2 per cent higher than in the previous three-month period, to be 24.6 per cent higher than at the same time the previous year.

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