Housing Finance Values Reach Record Highs
It follows the eighth consecutive month of growth.
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The value of new loan commitments for housing has grown for the eighth consecutive month, reaching another record high across the country according to statistics from the Australian Bureau of Statistics’ January 2021 Lending to Households and Business figures and the Real Estate Institute of Australia (REIA).
The report shows that new loan commitments for owner-occupier housing rose 10.5% in January and follows a 44.3% rise for the past 12 months. A rise was seen in all states and territories, with the exception of the Norther Territory.
Further, the value of new loan commitments to owner-occupiers rose 10.9% which marks the largest monthly increase since August 2020.
According to Adrian Kelly, President of the Real Estate Institute of Australia: “The number of owner-occupier first home buyer loan commitments increased by 9.6 per cent for the month and is 70.8 per cent higher than twelve months earlier. This is the highest level since May 2009, when the Commonwealth Government’s response to the GFC included the temporary increase in the first home-owner grant.”
Owner-occupier first home buyer loan commitments accounted for 36.5 per cent of all owner occupier commitments excluding refinancing.
Further, investors had also increased their activity with loans also increasing for the eighth consecutive month.
“The value of loan commitments for investor housing increasing by 9.4 per cent for the month, the largest rise since September 2016, and 22.7 per cent for the year on the back of improving rental market conditions. The largest increase in the value of new loan commitments to investors was in Victoria with an increase of 12.9 per cent in January,” added Mr Kelly.
Early indications from several big regional real-estate boards suggest March was overall another down month.
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For self-employed Australians, navigating the mortgage market can be complex—especially when income documentation doesn’t fit the standard mould. In this guide, Stephen Andrianakos, Director of Red Door Financial Group, outlines eight flexible loan structures designed to support business owners, freelancers, and entrepreneurs.
1. Full-Doc Loan
A full-doc loan is the most straightforward and competitive option for self-employed borrowers with up-to-date tax returns and financials. Lenders assess two years of tax returns, assessment notices, and business financials. This type of loan offers high borrowing capacity, access to features like offset accounts and redraw facilities, and fixed and variable rate choices.
2. Low-Doc Loan
Low-doc loans are designed for borrowers who can’t provide the usual financial documentation, such as those in start-up mode or recently expanded businesses. Instead of full tax returns, lenders accept alternatives like profit and loss statements or accountant’s declarations. While rates may be slightly higher, these loans make finance accessible where banks might otherwise decline.
3. Standard Variable Rate Loan
A standard variable loan moves with the market and offers flexibility in repayments, extra contributions, and redraw options. It’s ideal for borrowers who want to manage repayments actively or pay off their loans faster when income permits. With access to over 40 lenders, brokers can help match borrowers with a variable product suited to their financial strategy.
4. Fixed Rate Loan
A fixed-rate loan offers repayment certainty over a set term—typically one to five years. It’s popular with borrowers seeking predictability, especially in volatile rate environments. While fixed loans offer fewer flexible features, their stability can be valuable for budgeting and cash flow planning.
5. Split Loan
A split loan combines fixed and variable portions, giving borrowers the security of a fixed rate on part of the loan and the flexibility of a variable rate on the other. This structure benefits self-employed clients with irregular income, allowing them to lock in part of their repayment while keeping some funds accessible.
6. Construction Loan
Construction loans release funds in stages aligned with the building process, from the initial slab to completion. These loans suit clients building a new home or undertaking major renovations. Most lenders offer interest-only repayments during construction, switching to principal-and-interest after the build. Managing timelines and approvals is key to a smooth experience.
7. Interest-Only Loan
Interest-only loans allow borrowers to pay just the interest portion of the loan for a set period, preserving cash flow. This structure is often used during growth phases in business or for investment purposes. After the interest-only period, the loan typically converts to principal-and-interest repayments.
8. Offset Home Loan
An offset home loan links your savings account to your mortgage, reducing the interest charged on the loan. For self-employed borrowers with fluctuating income, it’s a valuable tool for managing cash flow while still reducing interest and accelerating loan repayment. The funds remain accessible, offering both flexibility and efficiency.
Red Door Financial Group is a Melbourne-based brokerage firm that offers personalised financial solutions for residential, commercial, and business lending.
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