New home lending not only rose 5.9% in September, but was up 25.5% year on year despite concerns the market would falter in the face of COVID-19, according to data just released from the Australian Bureau of Statistics (ABS).

The value of new loan commitments for housing over the month rose by $1.2bn, while the value of external refinancing came in at $13bn – up 15% from the month prior.

According to Canstar group executive of financial services, Steve Mickenbecker, the resilience the home lending market has shown throughout the pandemic was unexpected and unaccounted for in the forecasts made in the earliest days of COVID-19. 

"What has surprised this month is how far ahead we are, up 25.5% on September 2019 for new lending overall and 32.1% for refinance,” Mickenbecker said.

“Even more surprising is the 45.5% year on year growth for the number of first home buyers (FHB), suggesting that fear of missing out has made a comeback.”

The ABS data showed the value of owner occupier FHB loan commitments rose 5.6% from the month prior, while the number of commitments rose by 6.0%; owner occupier FHB loan commitments accounted for 34.5% of all owner occupier commitments, excluding refinancing.

To Mickenbecker, the September figures clearly indicate consumer confidence is on the rise within Australia.

“Borrowers are putting the surging international pandemic crisis and still-high levels of domestic support out of their thinking and are happily allowing early signs of recovery in Australia to drive their thinking,” he said. 

“Construction lending has seen a remarkable increase and is proof that the government’s HomeBuilder and low interest rates are working to drive spending in the property market," he added. 

The ABS data indicated the value of owner occupier construction lending rose by a “staggering” 25.3% in September, reaching $2.6bn.

However, while the data from the month was largely positive, Mickenbecker did note the figures finally reflected the full impact of the Victorian shutdown.

"September lending figures have fallen into line with preceding months, with the exception of Victoria where the second shutdown has finally worked itself into the numbers,” he said.

"Provided Australia defies a further COVID-19 wave, there are grounds for optimism that the housing stimulus will sustain lending above 2019 levels over coming months. The test will come as JobKeeper winds down."

Mickenbecker continued to draw attention to one more “soft spot” in the market – investment lending – up just 4.2% year on year compared to the 33.8% jump evidenced by owner occupiers.

“Investors are facing high vacancy rates and potentially expecting softer housing prices when JobKeeper disappears next year. Investors will want to see less uncertainty before flooding back into the market,” he said.