Lending indicators show buyer numbers are rising

Despite high interest rates, the number of active buyers in the market is on the rise, according to the latest lending indicators.

According to the Australian Bureau of Statistics (ABS) figures, the number of first-home buyers, owner-occupiers and investors has grown 31 per cent annually, with 50,188 buyers in the market in April.

The value of the loans taken out by these buyers has also increased, rising in April for the third consecutive month, according to the seasonally adjusted figures.

A total of $29.35 billion in new home and investment property loans were taken out in April, an increase of 4.8 per cent from March.

Investors show the greatest strength, with the value of new loans rising 5.6 per cent from the previous month and 36.1 per cent over the past year. 

Following closely, upgraders and downsizers saw a 4.7 per cent monthly increase and an 18.8 per cent annual rise. 

First-home buyers lagged, with the value of new loans rising by 3.4 per cent in April and 18.6 per cent over the year.

Canstar’s finance expert, Steve Mickenbecker, said rising prices had helped lift confidence.

“The value of home lending continued to recover in April, up by a healthy 4.8 per cent for the month and 24.6 per cent above April last year,” Mr Mickebecker said.

“The market is showing remarkable resilience in the face of 4.25 per cent of interest rate increases.”

“The recovery of home prices has bolstered lending. 

“But even excluding the impact of higher prices, the market is showing its strength, with the number of new loans in April up 11,775, or 31 per cent, from a year earlier, shrugging off the impact of a further 0.75 per cent cash rate increase in the same period.”

 Mr Mickebecker said many homebuyers remained active even after the Reserve Bank of Australia hiked rates.

“The initial shock of 3.5 per cent of cash rate increases in the year to April 2023 crashed the lending market, with the number of new loans down 25 per cent from 51,042 in April 2022 to 38,413 in April 2023,” he said.

“But that is where it has ended and apparently the market has found a floor, with the number of loans now almost recovered at 50,188.

“Increased interest rates have put a whole group of borrowers under extreme pressure, especially those who borrowed in the couple of years preceding cash rate increases, and that pain continues. 

“But new borrowers are putting it behind them.”

At the same time, the value of existing loans refinanced to a new lender rose 1.7 per cent compared to March, however, it remained 16.3 per cent down compared to last year.

A total of $19.54 billion in loans were switched to a new lender during April, far below the $21.5 billion at the peak in July 2023.

Mr Mickenbecker said borrowers who had already refinanced could seek opportunities to ‘double dip’ and secure a lower rate by refinancing again.

“The Reserve Bank reports existing owner occupied borrowers are repaying their loan at an average variable rate of 6.39 per cent,” he said.

“This rate is still way above the lowest rates in the market.”

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