Australian Bureau of Statistic (ABS) data shows the value of new home loans reached a record high in December 2020.

The total value of new loans for housing rose 8.6 per cent to $26 billion in December 2020, an increase of 31.2 per cent from the previous year. In NSW, new loans for owner-occupier reached $6.4 billion, while investor loans increased to $2.6 billion.

Matt Wright from Money Quest, said first home buyers were pushing the real estate market forward.

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"There is a lot of stimulus in the market for first home buyers, the level of inquiry from first home buyers is certainly up compared to where it was 12 months ago, that's off the back of first home owner entitlements including one the government released late last year which was an extension on the first home loan deposit scheme," Mr Wright said.

The increased cash balance that some households now have compared to 12 months ago is another reason that Mr Wright feels people are spending more.

"Statistics are out there indicating that households have a much higher level of savings available at the moment and that gives them a sense of confidence to maybe move forward with potential home upgrade, they have a bit more cash then before, so they now have the ability to upgrade into a home due to an increase in equity and property value," Mr Wright said.

The ABS data also shows fixed rates are becoming more preferably for those searching for loans as compared to variable rates.

"With interest rates lower than many of the variable rates that available at the moment and people have the feeling that they can lock in a historically low interest rate," Mr Wright said.

"The whole thought process around a fixed rate loan being entirely restrictive and not giving people an element of flexibility that's is slowly starting to be removed."

Adam Wiley from Regional Finance Brokers feels that banks were lowering interest rates for their own benefit.

"Fixed rates are lower than the variable at the moment and lenders are trying to stabilise their own portfolio by having clients stay two or three years, I think it's better for a bank to make it lower because they can stabilise their loan book and it's easier to forecast once on a fixed rate you are locked in."

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