Home Loan demand growing more than expected.

Home loan demand in Australia is growing according to recent figures. More than 66,000 Australians took out a home loan in May, despite the rising cost of buying a property.

With growing job security and falling unemployment rates translating to rising wages, coupled with some stability in interest rates, home buyers are becoming more comfortable about taking on debt, economists say.

In total, 66,040 owner-occupied housing loans were agreed to by banks and finance institutions in May, a seasonally adjusted increase of 0.1 per cent over loans committed in April, Australian Bureau of Statistics (ABS) data released today found.

This is the sixth straight month of growth in housing loans.

Economists had expected to see no growth in May.

The total value of dwelling commitments in May was $22.139 million, a 2.7 per cent increase on the previous month.

Housing affordability has been a hot topic in the political arena in the past week with the Opposition saying it will hold a summit in Canberra on July 26 to find ways to ease the pain for first homebuyers trying to get into the market, as well as tackle soaring rents.

The Government wants to conduct a national audit to find suitable land for housing and ease the cost burden on homebuyers.

The ABS data shows that first-time homebuyers made up 16.6 per cent of loans committed in May, down from 17.2 per cent the previous month, and well shy of the 26.1 per cent set in July 2001.

The average Australian home loan size was $268,900 in May.

Loan commitments in the country’s largest housing market in NSW fell 2.6 per cent in May after four straight months of growth, while loans grew in Victoria by 1.7 per cent.

In Queensland, loans rose by 1.4 per cent, a fourth straight month of growth, and in South Australia they rose by 0.7 per cent.

In Western Australia they dropped 7.3 per cent, almost whipping out the 7.9 per cent gain in the previous month, while the strongest state in the month was Tasmania, up 6.3 per cent.

In the Northern Territory loans rose 2.3 per cent and the in ACT they increased by 4.6 per cent.

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Rick Adlam has been involved in mortgage finance since 1996 with Equity Home Loans as a Founding Partner. Rick created Mr Mortgage™ in 1999, one of Australia's first online mortgage brokers. As a mortgage introducer Rick specializes in helping his clients get approved for low interest mortgage loans with no ongoing fees and charges, and low doc home loans for the self employed.

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