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Lending indicators

This release is about new borrower-accepted finance commitments for housing, personal and business loans

Reference period
October 2020
Released
3/12/2020
Future releases
  • Next Release 15/01/2021
    Lending indicators, November 2020
  • Next Release 1/02/2021
    Lending indicators, December 2020
  • Next Release 1/03/2021
    Lending indicators, January 2021
  • View all releases

Key statistics

In October 2020, new loan commitments (seasonally adjusted):

  • rose 0.7% for housing
  • rose 4.3% for personal fixed term loans
  • fell 2.1% for business construction (typically volatile series)

New borrower-accepted loan commitments (seasonally adjusted)

 Oct-20 ($b)Month percent change (%)Year percent change (%)
Households   
 Housing22.680.723.3
  Owner occupier (a)17.390.831.2
  Investor (a)5.290.32.8
 Personal   
  Fixed term loans1.564.3-7.9
Businesses   
 Construction2.02-2.1-40.3
 Purchase of property3.65-7.8-10.4

(a) Loan commitments for owner occupier, investor housing and personal fixed term loans exclude refinancing.

 

Record high in new loan commitments for housing

The total value of new loan commitments for housing and the value of owner occupier home loan commitments each reached record highs in October 2020.

The total value of new loan commitments for housing rose 0.7 per cent to $22.7 billion in October, seasonally adjusted. 

The value of new owner occupier home loan commitments rose 0.8 per cent to $17.4 billion in October 2020, more than 30 per cent higher than October 2019. 

Commitments for the construction of new dwellings rose 10.9 per cent and was the largest contributor to the rise in October’s owner occupier housing loan commitments. The value of construction loan commitments has risen by 65.6 per cent since July, which coincides with the June 2020 implementation of the Government’s HomeBuilder grant in response to COVID-19. Feedback from lenders was that there has been a large increase in first home buyers applying for these construction loans over the last few months.

In October, the number of owner occupier first home buyer loan commitments increased by 3.4 per cent to reach 13,481 (seasonally adjusted) which was more than 30 percent higher than in any pre-COVID month since 2009, when the first home owner grant was temporarily tripled as part of the Commonwealth Government’s economic stimulus package in response to the global financial crisis.

The value of owner occupier home loan commitments rose in all states and territories except Victoria and Australian Capital Territory. Victorian owner occupier home loan commitments fell 9.3 per cent in seasonally adjusted terms reflecting decreased housing market activity in August and September due to COVID-19 stage 4 restrictions in Melbourne and stage 3 in the rest of Victoria.

The values of commitments for existing dwellings and for residential land fell in Victoria. These falls were partly offset by rises in commitments for construction of new dwellings and for purchase of newly erected dwellings.

The total value of loan commitments for investor housing was unchanged at $5.3 billion.

The value of new loan commitments for fixed term personal finance rose 4.3 per cent in October, seasonally adjusted, as commitments for vehicles continued to recover from the fall in August.

This recent article provides an overview of the dwelling construction and finance process, and how specific events are recorded in certain Australian Bureau of Statistics (ABS) data series, including the Lending Indicators publication. It also describes how government grants, such as HomeBuilder, interact with the construction and finance process, and how such grants will impact ABS statistics.

 

Important data quality note

Economic and Financial Statistics (EFS) collection

From July 2019 onwards, data in this publication has been sourced from the Economic and Financial Statistics (EFS) collection, a new and improved data source collected by APRA on behalf of the ABS and RBA. There have been extensive and ongoing discussions with lenders about the EFS collection. Data quality is expected to continue to improve over time, as lenders become accustomed to the new reporting basis and further refine the data they report. This process is likely to lead to revisions, including to the historical time series - see below for further details.

Lender type breakdowns

Lender type breakdowns for Major banks, Other Authorised Deposit-taking Institutions (ADIs) and Non-ADIs are only available in this publication from July 2019 onwards. It is likely that more information about lender-type breakdowns will become available in the coming months.

Coronavirus (COVID-19) effects in October data

Borrower behaviour and lender processing times have been strongly affected by the COVID-19 pandemic over the last six months, which is impacting the month-on-month movements. Some lenders are reporting to us that current processing times mean that a portion of the housing loan commitments reported in this publication reflect loan applications submitted by borrowers about two months earlier, while personal finance commitments more closely reflect loan applications submitted in the reference period.
 

Suspension of trend series

The trend series attempts to measure underlying behaviour in lending activity. In the short term, this measurement will be significantly affected by changes to regular patterns in lending that will occur during this time, as potential home buyers face uncertainty about their job security, for example. If the trend estimates in this publication were to be calculated without fully accounting for this irregular event, they would likely provide a misleading view of underlying lending activity.

It may be some time before the underlying trend in lending activity can be accurately estimated. The Lending Indicators trend series have therefore been suspended starting from March 2020. The trend series will be reinstated when more certainty emerges in the underlying trend in lending.

Update to seasonal adjustment methods

Lending Indicators uses the concurrent seasonal adjustment method, meaning that seasonal factors are re-estimated each time a new data point becomes available. If not appropriately accounted for, unusual real-world events, such as COVID-19, can distort estimates calculated using this method. From April 2020, seasonal factors are being calculated using data up to and including March 2020, then projected from April 2020 onwards. This approach, known as the forward factor method, ensures that the seasonal factors are not distorted by COVID-19 impacts.

  

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Housing

New loan commitments by purpose (seasonally adjusted)

 Oct-2020Month percent changeYear percent change
Value($b)(%)(%)
 Owner occupier   
      Total housing (a)17.390.831.2
  Construction of dwellings2.8510.985.5
  Purchase of newly erected dwellings1.190.018.8
  Purchase of existing dwellings11.74-1.420.2
      First home buyers5.473.148.6
 Investor   
      Total housing (a)5.290.32.8
    
Number(No.)(%)(%)
 Owner occupier   
      Total housing (a) (b)---
  Construction of dwellings6 63111.582.8
  Purchase of newly erected dwellings2 434-1.017.0
  Purchase of existing dwellings23 261-2.514.6
      First home buyers13 4813.448.1
 Investor   
      Total housing (a) (b)---

(a) Housing includes loan commitments for dwellings, purchase of residential land and for alterations and additions.
(b) There is no seasonally adjusted or trend data available for the number of owner occupiers or investors for total housing as the data was collected from July 2019.

 

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(a) For periods prior to July 2019, statistics about owner occupier commitments for residential land are modelled using data about the total value of  commitments for residential land.

* Hide/unhide series in the graph by clicking the legend above (toggle the 'purchase of existing dwellings' series for a closer look at the other purposes of owner occupier lending).

 

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*A loan is considered funded once any portion of the funds is made available for the borrower to draw down according to the terms of the contract. This will occur after there is a borrower-accepted commitment to provide finance.

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First home buyers

In October 2020:

  • the number of owner occupier first home buyer loan commitments increased 3.4% in seasonally adjusted terms
  • the number of first home buyer loan commitments for investment purposes accounted for 4.0% of all first home buyer commitments, in original terms
  • owner occupier first home buyer loan commitments accounted for 35.3% of all owner occupier commitments (excluding refinancing), in original terms

 

Additional information

Previously, the ABS published a first home buyer ratio which was the ratio of owner occupier first home buyer loan commitments to all owner occupier loan commitments. The table below presents two owner occupier first home buyer ratios.

  • The first ratio is the ratio of first home buyer loan commitments to total dwelling commitments (excluding refinancing). This is similar to the ratio published prior to October 2019. Loan commitments for dwellings is the sum of loan commitments for construction of dwellings, newly erected dwellings and existing dwellings. 
  • The second ratio is a new ratio, the ratio of first home buyer loan commitments to total housing loan commitments (excluding refinancing). This ratio uses the new key statistic, total housing loan commitments. Total housing loan commitments is the sum of loan commitments for dwellings and loan commitments for purchases of residential land and alterations and additions. 

First home buyer ratios should be used with caution because the direction of movements in the ratio are often not indicative of the direction of movement in the number of first home buyers. First home buyer ratios are no longer routinely published by the ABS in the time series spreadsheets. 

The table below does not include first home buyer loan commitments for investors. Information about the number of loan commitments for investors is new and is separately presented in a graph below.

  

New loan commitments to owner occupier first home buyers (original), number

 First home buyer loan commitmentsFirst home buyer ratio
 NumberDwellingsHousing
Total Australia 1412642.335.3
  New South Wales 344237.132.2
  Victoria 338046.536.2
  Queensland 331041.435.2
  South Australia 90235.928.6
  Western Australia 232951.444.0
  Tasmania 33243.733.8
  Northern Territory 12248.043.6
  Australian Capital Territory 30939.635.1
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* Investor first home buyers (number) for Tas and NT are not available for publication

Previous catalogue number

This release previously used catalogue number 5601.0.