In May 2023, there was a notable surge in new loan commitments, which rose by 4.8% to reach a substantial amount of $25 billion. This upward trend indicates a growing level of activity among property buyers, despite enduring a staggering 12 interest rate hikes since May 2022.

Among the various segments, investor lending experienced the most significant growth, with an impressive increase of 6.2%. Owner-occupier lending also showed a notable rise of 4%.

Comparatively, these figures reveal a significant improvement in new lending volumes, surpassing the recent low witnessed in June 2020 when it had plummeted to $17 billion. The current lending volumes now stand at an impressive 45% above that previous low point.

In the near term, it is unlikely that new commitment volumes will reach the peak levels witnessed in 2021, when interest rates were at historic lows. However, lending has shown stability since the latter part of last year. The recent upticks in May and March signify that individuals looking for properties are still willing to participate in the market, despite the elevated lending rates.

Furthermore, it is noteworthy that both the number of new commitments and the overall dollar amount are higher than the levels observed before the onset of the pandemic in February 2020. The total loan dollar amount has experienced a significant increase of $5.6 billion, representing a notable rise of 29%.

The market is witnessing a positive shift in both first-home buyer and investor loans. In May, first-home buyers reemerged, with $1.4 billion worth of loans written, marking a month-on-month increase of 5.5%. The peak for first-home buyer lending occurred in January 2021 when $7 billion of new loan commitments were approved.

However, first-time buyers began stepping back from the market earlier than investors and other owner-occupiers due to the rapid increase in property prices. In December 2020, new commitments for first-home buyers accounted for 25% of all loan approvals, surpassing those from investors.

By comparing the PropTrack Home Price Index with the loan commitments for each buyer type, it becomes apparent that first-home buyers started reducing their participation ten months into the pandemic when prices began escalating at an approximate rate of 2% per month. This trend indicates that prices have become unattainable for many aspiring first-home buyers, despite the availability of extremely low-interest rates.

However, the current data on new loan commitments demonstrates a continued demand for properties, despite the higher home loan rates and limited housing supply. Moreover, the increase in buyer interest aligns with the rebounding home prices and a temporary halt in interest rate hikes this month.

These positive developments are occurring even during the typically slower winter months, suggesting promising prospects for a robust spring selling season.

If you’re looking to sell your house, the first step is to get a price assessment. Book your free, unbiased assessment today.