The value of new loan commitments for housing rose 4.8 per cent in May. Image: Canva.
  • New loan commitments rose 4.8% for housing ($24.9B) in May
  • This follows an April fall of 1%
  • Business construction recorded a 19.4% decline

The latest Australian Bureau of Statistics (ABS) lending indicators have been released, with new loan commitments for homes recording an almost 5% rise.

The value of new loan commitments for housing increased by 4.8% to $24.9 billion in May 2023 following a 1% decline in April.

ABS Head of Finance Statistics, Mish Tan, said, “The value of new owner-occupier loan commitments rose 4% to $16.4 billion in May, while the value of new investor loan commitments rose 6.2% to $8.5 billion.”

The latest data also shows the value of new owner-occupier dwelling loan commitments has surpassed pre-pandemic levels. The ABS noted that the May 2023 figures are 17% higher than February 2020. However, the number of commitments is 0.2% lower.

First home buyer numbers are also on the rise, with the number of new owner-occupier first home buyer commitments rising 2.7%. This follows a 0.3% fall in April, and is 17.4% lower compared to a year ago.

The ABS also noted refinancing is on the up. The value of new owner-occupier housing loan refinances between lenders rose 8.6% and reached a new high of $14.1 billion. This comes amid an environment of increasing interest rates.

Loans still far below last year’s numbers

Master Builders Australia (MBA) chief economist Shane Garrett noted that lending figures provide a good indication of what is likely to develop on the ground over the coming months.

“The number of loans for the construction of a new home eased slightly during May (-0.2%) and a 5.1% uplift in the number of loans for the purchase of newly built dwelling. However, loans are still over 40% lower than a year ago,” Garrett said.

Investor values up

The May data showed the value of new loan commitments for investor housing rose 6.2% to $8.5 billion; compared to a year ago, the figures are 20.9% lower.

The value of external refinancing for investor housing also rose, up 7.2% to $6.8 billion; this figure is 25.6% higher than a year ago.

Investors were concentrated on the east coast, with the data showing the value of new loan commitments for investor housing was up 8.5% in New South Wales, up 9% in Victoria, up 17.5% in South Australia, up 4.5% in Queensland, up 33.3% in ACT, up 33.2% in Northern Territory, and up 7.2% in Tasmania; Western Australia recorded a fall of 0.9%.

First home buyers numbers rise

At the national level, owner-occupier first home buyers rose 2.7% after a fall of 0.3% in April, which was 17.4% lower compared to a year ago.

The Northern Territory showed no change, however, the following states recorded rises:

  • New South Wales, 8.9%
  • Victoria, 6.4% 
  • Queensland, 2.4% 
  • Australian Capital Territory, 13% 
  • Western Australia, 1.6% 
  • Tasmania, 0.7% 

Only South Australia recorded a fall, down 3.2%.

Housing finance loan commitments by property, purpose and state, seasonally adjusted – May 2023.

Source: ABS. * Total Australia levels do not necessarily equal the sum of states, due to independent seasonal adjustment. ** All movements are on a month-to-month basis. † A smaller and more volatile series.

Other key statistics

The ABS report also noted the following regarding new loan commitments:

  • Increase of 4.3% for personal fixed term loans.
  • Fell 19.4% for business construction but a rise of 1.6% in trend terms.
  • Increase of 8.1% for business purchase of a property and rose 1.6% in trend terms.

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