- The Australian Bureau of Statistics (ABS) has revealed there was an 11.6 per cent drop in the value of home loan commitments in May, 2020
- Of that, the value of owner-occupier home loans fell 10.2 per cent, while investment home loans fell 15.6 per cent
- The total number of new loans also fell during the same period, as COVID-19 lockdowns came into effect, halting sales
- However, the value of personal loans rose during the month of May, up 14.5 per cent as more people purchased vehicles
- Construction loans also grew slightly during May,
The value of new home loans fell 11.6 per cent in May, according to the Australian Bureau of Statistics (ABS).
The ABS said the fall was the largest recorded since it began the series on home loan values.
“This was the largest fall in the history of the series, driven by strong falls in the value of loan commitments for housing in New South Wales and Victoria,” explained ABS Chief Economist Bruce Hockman.
The value of owner-occupier home loans housing fell 10.2 per cent during May, while investment home loans fell by 15.6 per cent.
While, the number of first home buyer loans fell by 9.3 per cent in the same period.
Mixed results
The drop was attributed to the COVID-19 pandemic and subsequent lockdowns, which stopped Australians from being able to view homes for sale and attend auctions.
However, the number of existing home-owners refinancing their loans rose in May, amid record low interest rates.
“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”, explained Bruce.
More loans
Along with refinancing, personal interest loans grew exponentially in May, up 14.5 pent, following a huge 24.8 per cent drop in April.
The ABS attributes the rise in part to a rise in the number of people taking out a loan to buy a car.
New loan commitments also rose for business construction, up 3.6 per cent.