Improved access to finance and lower interest rates are helping households get into real estate, with the number of new loans approved in July rising almost 4% to $32.24 billion.

Lending to owner-occupiers (excluding refinancing) rose 5.3% in July, new data from the Australian Bureau of Statistics shows.

Refinancing of existing home loans also increased by 5.4% as homeowners look to get the best value for money, as lenders compete by offering attractive interest rate deals.

Property analyst CoreLogic’s head of Australian research, Tim Lawless, says the findings are expected but the pace of growth is surprising.

“We haven’t seen monthly numbers of this magnitude since 2016 for investors and 2015 for owner-occupiers,” Lawless says. “It’s an indication that all the stimulus that is flowing through the marketplace is now starting to show up in credit flows.”

In July, the Reserve Bank approved a second reduction to interest rates in two months, bringing the official interest rate down to the current low of 1%.

In the same week, banking regulator APRA lowered the serviceability floor on home loan approvals from 7% to a buffer of 2.5% over the loan’s interest rate.

Investors have continued their come-back into the housing market, with the value of investor loans increasing 4.7%.

First home buyers have continued their slow but steady rise as a market force, increasing their share of new owner-occupier lending to 29.4% in July, the highest proportion since January 2012.

Meanwhile, fixed loans continue to fall out of favour with borrowers. The proportion of owner-occupiers fixing fell to 10.4%, which is the lowest level since October 2015. research director, Sally Tindall, says the stars are starting to align for borrowers in the lead up to the spring property season.

“Borrowers are feeling buoyed by a combination of plummeting interest rates, tax cuts, more relaxed serviceability measures and clarity around negative gearing,” she says.

“Interestingly, this is the first month that factors in APRA’s axing of its 7% serviceability floor. It’s likely that part of the bounce can be attributed to this, and we expect it to continue to have a positive effect on the market.”

“However, Australians are still on the sidelines when it comes to fixing, despite banks’ best efforts to attract new fixed borrowers onto their books”, she said.

“It’s not surprising that a lot of Australians are now opting not to fix their home loan rate in this climate when the RBA has made it clear there could be one, if not two more rate cuts to come.

“There are now dozens of lenders offering fixed rates below 3 percent and as low as 2.74 percent, for owner-occupiers paying principal and interest, especially if they have a decent amount of equity in their home.”