Record fall in housing loans during May

Housing loan approvals plummeted by 11.6 per cent in May, the largest monthly fall on record.

Australian Bureau of Statistics chief economist Bruce Hockman said the large drop was driven by strong falls in the value of new loan commitments in NSW and Victoria amid the coronavirus pandemic.

Financing for investment properties dropped by 15.6 per cent over the month, while it fell 10.2 per cent for owner-occupiers.

The number of first home buyers taking out loans dropped 9.3 per cent.

However, in a time of record-low interest rates, the number of people refinancing loans had a big jump.

"While reduced transactions in the housing market stifled new loan activity in May, the value of existing owner-occupier loans refinanced with a different bank was by far the highest on record as borrowers responded to reduced interest rates and refinancing offers," Mr Hockman said on Thursday.

Prime Minister Scott Morrison said it was not surprising to see concern among consumers right now.

"But I think, fundamentally, the structural position of the housing markets in Australia would tell a far more stronger tale in terms of their resilience," he told reporters in Canberra.

"It would be presumptive, or a little premature is probably the better word, to be making medium or even short-term forecasts about the Australian property market at the moment."

He was hopeful the housing market would recover as parts of the economy opened back up and jobs returned.

Labor said the drop off in home loans would likely presage a fall in new houses being built and construction job losses.

Opposition housing spokesman Jason Clare and financial services spokesman Stephen Jones said the HomeBuilder grants scheme wouldn't go far enough to offset this likely fall.

"These record-breaking figures reveal just how bad the crisis is and why the government needs to swallow its pride and fix its 'HomeBlunder' scheme," they said.