While the demand for home loans among owner-occupiers and investors fell in May, loans to first home buyers increased significantly over the month.

According to new data from the Australian Bureau of Statistics (ABS), in seasonally adjusted terms, there was a reduction in the value of loans to owner-occupiers and investors in May, with the number of loans to owner-occupiers remaining stable month on month. The ABS reported that the value of loans to owner-occupiers fell 1.7% over May and the value of loans to investors fell 1% on the month prior. The data also revealed that 46,600 home loans to owner-occupiers were approved throughout the month of May – a reduction of 0.1% excluding refinance and a reduction of 12.4% year on year.

“This decline in home loan demand is unsurprising when you consider the broader context of the macro environment at the time,” said Susan Mitchell, chief executive officer at lender Mortgage Choice. “Leading up to May, there was still a lot of uncertainty in the market in the lead up to the federal election, and property prices continued on their downward trend, albeit at a slower pace than in preceding months. With this in mind, I would not have expected to see an increase in demand from borrowers.”

On the other hand, Mitchell said that loans to first home buyer increased by almost 20% over the month of May. And while the data showed there was a 7% decline year on year, the new data suggests that sentiment amongst first home buyers is improving.

“The reality is the conditions in the market are very attractive to those looking to buy their first home,” said Mitchell. “Declining dwelling values coupled with historically low interest rates would no doubt be encouraging buyers to get their foot on the property ladder.”