New Australia Bureau of Statistics figures show new home loan commitments have fallen off a cliff.
New Australia Bureau of Statistics figures show new home loan commitments have fallen off a cliff.

Worrying housing market figure

The number of new home loan commitments have fallen off a cliff, with the Australian Bureau of Statistics recording its largest monthly drop.

Figures released on Wednesday by the ABS reveals new home loan numbers in the month of May fell sharply by 11.6 per cent, driven by substantial falls in both New South Wales and Victoria.

The residential property market has experienced a significant downturn as result of the coronavirus pandemic that has stifled property transactions.

Owner occupier home loans have dropped 10.2 per cent over the month, while investor only loan commitments fell by 15.6 per cent nationally.

First-home buyer owner-occupier loans declined by 9.3 per cent.

ABS chief economist Bruce Hockman said while new loan commitment activity had dropped off, existing homeowners were taking advantage of low interest rates and refinancing with other banks.

"While reduced transactions in the housing market stifled new loan activity in May, the value of existing owner-occupier loans refinanced with a different bank was by far the highest on record as borrowers responded to reduced interest rates and refinancing offers," Mr Hockman said.

Fixed-term personal finance has rebounded by 14.5 per cent in May compared with April figures, which suffered a monthly drop of 24.8 per cent.

Mr Hockman noted fixed-term personal finance commitments within the month were spurred on from new vehicle loans.

Westpac chief economist Matthew Hassan said the May figures showed the full initial impact of the COVID-19 shock upon the housing finance market.

"These figures are showing a lagged impact from the April lockdown rather than anything relating to the subsequent reopening," Mr Hassan said.

Originally published as Worrying housing market figure



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