Home loan demand has declined for the third consecutive month, according to new data from the Australian Bureau of Statistics (ABS).
The latest Housing Finance data showed that 53,062 home loans were approved throughout April, down 1.9% from 54,088 in the previous month.
“April marked the third consecutive month that we saw a drop in the number of home loan approvals, and it is actually the lowest since May 2015 when 50,049 home loans were approved,” said John Flavell, CEO of Mortgage Choice.
Flavell said the slight drop in home loan demand wasn’t all that surprising since Australia’s lenders have been seriously tweaking their pricing and policy in recent months. “This added level of complexity in the home loan market has subsequently caused demand to slide slightly,” he said.
According to the latest Housing Finance data, the value of all dwelling commitments fell 1.6% to $32.5bn over the month of April. “[Meanwhile] the value of owner-occupied housing fell 1.1% to $19.9 billion, while the value of investment loans written fell 2.3% to $12.6 billion,” Flavell said.
The drop in the value of home loan approvals shouldn’t come as a shock, given that we’re now heading into the cooler months. “As we head into the winter months, the market gets cooler in terms of demand and we see property price growth start to stagnate. As such, it’s no surprise to see a slight fall in the value of loans written,” he said.
Looking ahead, Flavell expects home loan demand to remain relatively strong, despite the growing complexity of the mortgage market. “Interest rates remain at historical lows, which keeps the cost of borrowing at affordable levels, and this will keep demand relatively strong,” he said.
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