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Lockdown puts the brakes on new home lending but mortgage sizes blowout
The value of new home loans has dropped by $1.37 billion in just a month, according to the latest ABS lending indicators released today.
In August, a total of $30.76 billion of new loans were settled, down 4.3 per cent from July, in seasonally-adjusted terms.
New loans to owner-occupiers fell by $1.51 billion month-on-month, a drop of 6.6 per cent.
New investor loans rose for the tenth month in a row, almost doubling from August 2020.
RateCity.com.au research director, Sally Tindall, said: “NSW saw the biggest drop in dollar terms as lockdowns promoted some sellers put their plans on hold, while potential buyers were limited by restrictions.”
“Investors defied the trend, particularly in Queensland, where lockdowns have been brief and property prices are lower than in NSW and Victoria,” she said.
Value of new home loans approved in August
| Amount | Monthly change | Year-on-year change | |
| TOTAL | $30.76 billion | -$1.37 billion -4.3% | $9.89 billion 47.4% |
| Owner-occupier | $21.26 billion | -$1.51 billion -6.6% | $5.33 billion 33.5% |
| Investor | $9.49 billion | $139 million 1.5% | $4.55 billion 92.2% |
Source: ABS Lending Indicators August 2021, released 1 October 2021, seasonally adjusted data. Annual change is Aug 2020 to Aug 2021.
Loan sizes explode as house prices continue to rise
With property prices across Australia rising 20.3 per cent in just one year, according to today’s CoreLogic data, the debt households are taking on is also exploding.
Analysis of today’s ABS data by RateCity.com.au shows the average new loan in NSW and Victoria has risen by more than $100,000 in just a year.
Average mortgage size
| 1 year ago Aug-2020 | NOW Aug-2021 | Difference | |
| NSW | $562,966 | $674,839 | $111,873 |
| VIC | $447,766 | $553,802 | $106,036 |
| QLD | $389,117 | $436,301 | $47,184 |
| SA | $338,204 | $368,016 | $29,813 |
| WA | $368,092 | $408,828 | $40,736 |
| TAS | $290,964 | $355,601 | $64,637 |
| NT | $355,497 | $382,085 | $26,587 |
| ACT | $475,698 | $523,001 | $47,303 |
Source: ABS lending indicators, original data from August 2021, released October 2021. Total housing excluding refinancing.
Sally Tindall said: “Surging property prices have pushed some people into borrowing more than they had ever imagined.”
“New buyers might be able to make their monthly mortgage repayments now while rates are low, but a home loan is for up to 30 years, a lot can happen in that time.
“With loan sizes exploding, it’s no surprise APRA is now looking to implement policies to prevent Australians from taking on unsafe levels of debt.
“While no one likes to be told ‘no’ from their bank, these types of policy changes are about protecting people from overcommitting themselves,” she said.
The number of first home buyers drops 22.8% since January
In a worrying trend, the number of owner-occupier first home buyer loans has dropped by 3.0 per cent month-on-month.
Since the peak in January 2021, the number of owner-occupiers first-home buyers is down 22.8 per cent.
Owner-occupier first home buyers in August
| Amount | Monthly change | Change since peak (Jan 2021) | |
| Value of loans | $5.55 billion | -$289million -4.9% | -$1.52 billion -21.5% |
| Number of loans | 12,547 | -383 -3.0% | -3,710 -22.8% |
Source: ABS Lending Indicators August 2021, released 1 October 2021, excludes refinancing, seasonally adjusted data.
Sally Tindall said: “With the number of first home buyers dropping for the seventh month in a row, more needs to be done to help young Australians get into the market.
“First home buyers just can’t compete with bidders who already have skin in the game.
“When they’re forced to go toe-to-toe with a cashed-up investor or an existing owner-occupier, their budgets just don’t stack up,” she said.
External refinancing hits another record high
A total of $17.78 billion in mortgages were refinanced in the month of August, a new record high.
This was an increase of $559 million from the previous month, in seasonally-adjusted terms.
Value of externally refinanced loans in August
| Amount in August 2021 | Monthly change | Year-on-year change | Change from 2 years ago |
$17.78 billion – highest on record | $559 million 3.2% | $6.5 billion 58.1% | $8.54 billion 92.4% |
Source: ABS Lending Indicators August 2021, released 1 October 2021, seasonally adjusted data. Annual change is Aug 2020 to Aug 2021, and 2-year change is Aug 2019 to Aug 2021.
Sally Tindall said: “Australians have been pro-actively refinancing their loans since the cash rate cuts of 2019, a trend that has been turbo-charged since COVID.”
“We’re now seeing fixed rates as low as 1.59 per cent – it’s no wonder people are shopping around,” she said.
State by state – total value of new home loans
| Aug-21 | Month-on-month change | |
| Australia | $30.76 billion | -4.3% |
| NSW | $10.95 billion | -7.5% |
| VIC | $8.91 billion | -3.1% |
| QLD | $5.81 billion | 5.4% |
| SA | $1.49 billion | 0.9% |
| WA | $2.53 billion | -1.0% |
| TAS | $394 million | -0.7% |
| NT | $167 million | 7.0% |
| ACT | $751 million | -7.9% |
Source: ABS Lending Indicators August 2021, released 1 October 2021, seasonally adjusted data.
Disclaimer
This article is over two years old, last updated on October 1, 2021. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.
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