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New data suggests that the cooling property prices are boosting sales in the residential property market.
Property prices in Australia seemed to have stabilised and the data is showing that it is influencing the number of home loan applications.
The latest Housing Finance data from the ABS showed that, in May, 53,057 home loans were approved, up by 1.1 per cent from April.
Mortgage Choice CEO Susan Mitchell said that the data showed an increase in the number and value of home loans approved.
“This data is promising and suggests that housing affordability may be improving, enticing once cautious home buyers to enter the market or property investors seeking a bargain,” Ms Mitchell said.
The statistics also showed that $31.9 billion worth of dwelling commitments were made in May, an increase of 0.5 of a percentage point.
“It may be too soon to tell if APRA’s removal of the cap on investor loans is having any effect on the increase in demand for this type of home loan,” the CEO said.
CoreLogic data revealed that as home loans rose, dwelling values declined for the first time since 2012.
The latest Mortgage Choice home loan approval data showed that an 11-month end of variable rate preference was ending, with fixed rate home loans accounting for 18.67 per cent of all loans, up from 17.93 per cent from the month prior.
Ms Mitchell said that a combination of factors, including an increase in wholesale funding costs, regulatory changes and tighter lending policies, were having an effect on borrowing.
“These factors are pushing some borrowers who are increasingly wary of the financial impact from future rate rises to seek certainty by fixing their home loans,” the CEO said.
Ms Mitchell said that the data showed fixed home loans were on the rise but were still not the preferred type.
“Variable rate home loans continue to be the most popular type of home loan products across the nation,” Ms Mitchell said.
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