Low interest rates and FOMO drive home lending to new high in December

The value of home loans settled in the month of December has hit another record high, thanks to record-low rates, generous government incentives and borrowers’ fear of missing out.

The latest ABS lending indicators showed the total value of owner-occupier home loans settled in December was $19.94 billion – a record high – up 38.9 per cent, year-on-year, in seasonally-adjusted terms.

Overall, lending to households also hit a new record high of $26.01 billion, up 31.2 per cent year-on-year.

What this means:

• The data supports other indicators of a strong rebound in housing market activity. A lift in construction finance and the extension of the HomeBuilder grant to March 2021 is also likely to further support detached dwelling construction.

• The strong lift in housing market activity is expected to flow through to stamp duty revenue for state governments with potential implications for issuance needs. A prospective recovery in stamp duty revenues is also occurring given payroll wages have returned to pre-pandemic levels across most states.

• The recent lift in the fixed rate share of new home loans is being sustained and now hovers around 35%.

Source: Low interest rates and FOMO drive home lending to new high in December (propertyupdate.com.au)