Modest dip in lending for May, but housing recovery shows resilience
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New data from the Australian Bureau of Statistics (ABS) reveals a slight decrease in lending activity for May, while still showing strong signs of housing market recovery compared to last year.
Key findings include:
- Total value of new loan commitments fell 1.7% in May, but is up 18% compared to a year ago
- Number of buyers in the market increased 12.1% compared to the previous year
- Investment lending led growth with a 29.5% annual increase
- First home buyers continue to struggle, with new loans falling 2.9% for the month and 10.1% for the year
Steve Mickenbecker, Canstar’s finance expert, commented: “The new lending market in May may have dipped ever so slightly, by 1.7 percent in seasonally adjusted terms after its healthy growth in April, but it’s still 18 percent higher than a year ago.”
He added: “The May lending volume remains 15.1 percent below May 2022 and the number of loans is down 6.4 percent in original terms. It seems that the full recovery to pre-Reserve Bank rate increase days suggested in April’s data is still a way off.”
Other notable points:
- Average loan size increased by over $41,000 (7.1%) compared to last year
- Refinancing activity decreased 0.7% for the month and 22.2% compared to May 2023
- Investors continue to dominate market recovery, while first home buyers face challenges
Mickenbecker urged borrowers to consider refinancing, noting: “The stalling of refinance makes no sense when the average borrower’s rate is a full 0.60 percent above the 5.80 percent lowest variable rate on Canstar for a 20 percent deposit loan. On a $600,000 loan over 30 years that potential saving is $241 a month.”
Despite the slight dip in May, the data suggests a resilient housing market recovery in the face of economic pressures and recent interest rate hikes.
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