Investors dip out of the market for the first time in 18 months

The value of new home loans dropped from its record high last month as investor lending posted its first drop since October 2020.

According to the ABS lending indicators for February, released today, owner-occupier lending also fell, down 4.7 per cent from the previous month, in seasonally adjusted terms.

Value of new home loans approved in February

Source: ABS Lending Indicators Feb 2022, released 1 April 2022, seasonally adjusted data. Annual change is Feb 2021 to Feb 2022. Excludes refinancing.

First home buyers take another step back

The number of owner-occupier first home buyer loans dropped again, down 8.3% from the previous month and down 37 per cent from the previous year.

Owner-occupier first home buyers in February

Source: ABS Lending Indicators Feb 2022, released 1 April 2022, seasonally adjusted data.

Fixed rates continue to slide in popularity

Unsurprisingly, the proportion of new lending opting for a fixed rate continued to nose-dive on the back of sustained increases to fixed-rate pricing.

The proportion of new fixed loans funded in the month of February was just 28 per cent; down from the peak in July 2021 where 46 per cent of all new loans were fixed.

Source: ABS lending indicators Feb 2022. Includes internal and external refinancing, original data.

Average new loan sizes fall in NSW, VIC, SA, ACT

The national average loan size for owner-occupier dwellings dropped from its record high last month, down 4 per cent (-$24,442). That said, compared to a year ago, the average new loan size is up $100,780 or 20 per cent.

Monthly drops were recorded in NSW, Victoria, South Australia and ACT. All other states and territories rose.

Source: ABS lending indicators, Feb 2022, original data for owner-occupier dwellings. Includes construction and the purchase of new and existing dwellings.

Average new owner-occupier loan size

Source: ABS lending indicators, Feb 2022, original data for owner-occupier dwellings. Includes construction and the purchase of new and existing dwellings.

RateCity.com.au research director, Sally Tindall, said the drop in new home loans from investors was significant.

“This is the first drop in investor lending since October 2020, when the property market was starting to pick up pace,” she said.

“With the latest CoreLogic data showing another month of drops in property prices for both Sydney and Melbourne, this could be yet another indication the property market is indeed starting to cool, at least in these hotspots.

“If the forecasted property price drops over the next couple of years are realised, we could see investors retreat further, which is likely to help cool things down.

“The continued decline in owner-occupier first home buyer numbers is a concern, with a drop of 37 per cent compared to the same time last year.

“Many young Australians are finding it near impossible to compete with cashed up investors and upgraders in what has been, to date, a fiery property market.

“Hopefully over the next 12 months, the market will lose some steam, giving first home buyers a much-needed opportunity to put a winning bid in,” she said.

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