By Lisa Hughes

Buyer confidence: 7 Koondara Street, Camp Hill, recently sold for $1.535 million through Place Bulimba estate agency. Source: Supplied

Consumer confidence in the housing market continues to climb, with the latest figures released by the Australian Bureau of Statistics showing that new loan commitments have risen across all buyer groups, with Queensland leading the way in most instances.

Adrian Kelly, president of the Real Estate Institute of Australia said the ABS figures reveal a 12.6 per cent increase in new loan commitments for owner-occupier housing in August, compared with the previous month, and a 19.3 per cent rise for the year.

He said increases were seen in all states and territories, except the Northern Territory. “The largest increases in the value of new loan commitments were in Victoria, Queensland and New South Wales.”

While this is the largest monthly increase in the ABS’s history of its Lending to Household and Business series, Mr Kelly said some caution in the interpretation of the month-to-month comparisons was required.

“The ABS points out that commitments in August reflect customer demand in earlier months, with lenders reporting that current processing times mean that August finance commitments reflect customer demand in June and early July, prior to Victoria imposing stage 3 and stage 4 restrictions,” Mr Kelly said.

Real Estate Institute of Queensland chief executive Antonia Mercorella. Source: Supplied

“The value of loan commitments for investor housing rose 9.3 per cent for the month, but was down 4.6 per cent for the year, with Queensland and Victoria driving the increase in commitments for investment housing in August.

“The number of owner-occupier first-home buyer loan commitments increased by 17.7 per cent for the month. This is the third consecutive monthly increase and is the highest level since October 2009.”

Mr Kelly said the recovery in lending is encouraging and reflects the recent easing in restrictions on movements and subsequent market response. However, he said the figures did not yet reflect the impact of second-wave restrictions in Australia’s second-largest market of Melbourne.

The rise in consumer confidence, for Queensland at least, looks set to continue for some time.

With rock-bottom interest rates unlikely to move in the near future, and the banks and Federal Government pushing to ease borrowing restrictions by February next year, mean it has never been a better time to borrow to buy a home.

However, is this combination in an ease of borrowing and increase in house prices setting us up for a potential financial fall?

Antonia Mercorella, chief executive of the Real Estate Institute of Queensland, said that while a pandemic did require reform of lending legislation, finding the balance was key.

“It was not that long ago that we had a Royal Commission into banking practices and there was some pretty dark and damning revelations that came out of that.

“As a result we saw the pendulum swing, perhaps too far in the other direction, where the banks became too tight with their lending practices.”

Ms Mercorella said that in a pandemic it was necessary for lending laws to be changed but it was important that that occurs within a framework that allows people to be protected and does not lead to borrowers losing their homes and livelihoods.

“We welcome lending practises that allow people to be able to make decisions and fund their acquisitions. This is beneficial to mortgagees and also the broader economy, but we don’t want to see the more vulnerable in society to be negatively affected,” she said.

Originally published as Number of new mortgages is at an all-time high