Housing finance rebounds amid gloomy economic outlook

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The recent successive rate cuts and easing property prices have fuelled a turnaround in housing finance according to the latest data.

The Australian Bureau of Statistics revealed that the number of owner-occupier housing loans rose by 1.3% in October to 48,299 after falling for previous eight straight months. The value of new commitments rose by 1.9% in October to $17.7 billion. Investment loans rose by 0.7% while owner-occupier loans rose by 5.5%.

The Housing Industry Association chief economist Harley Dale said the it was encouraging to see October mark the first rise in home lending since January, especially as the result pre-dates further interest rate cuts in November and December.
"The number of loans was still 24% down on October last year, a sign of just how weak the home lending market is. Nevertheless, amidst the barrage of negative updates on the economy, we did get arise, albeit a small one, "said Dale.

The Australian Finance Group has also reported a recovery in mortgage sales thanks to an increased first homebuyer's activity. AFG arranged at total of $474 million worth of home loans for first homebuyers in November - a dramatic increase from $215m in August and equates to an increase of 120% in volume.

AFG said first homebuyers now account for a fifth (22%) of all new mortgages arranged by the mortgage broker.

"This influx of first home buyers is good news, not only for the lower end, but for the medium term health of the property market as a whole," said Mark Hewitt, general manager sales and operations at AFG.

"In many ways, there has never been a better time to buy a first home. Mortgage repayments are significantly lower than they've been for a long time, and may go even lower. Property prices in many areas have become more affordable, and buyers are keen to take advantage of generous government incentives while they're still on the table."

Queensland experienced the biggest surge in first home buyers, with loan volumes increasing by a staggering 152% between August ($57m) and November ($144m).

In Victoria, first timers accounted for $95m worth of loans, up from $43m, while in NSW activity shot up 113%, from $60m in August to $128m.

South Australia rose 107%, from $14m to $29m, and even Western Australia, which has had a tough first home market, experienced an 89% increase between August and November, up from $39m to $74m.

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