New home lending tanks in July

The value of new home lending has fallen by $2.62 billion in July – the biggest monthly drop on record in dollar terms.

According to the ABS lending indicators for July, released today, owner-occupier lending fell $1.44 billion – a 7.0 per cent drop – from the previous month, in seasonally adjusted terms.

Investor lending also dropped by $1.18 billion, down 11.2 per cent, this month.

Today’s owner-occupier and investor lending figures for July are lower than when compared to a year ago, but higher than two years ago, when the nation was less than six months into the COVID pandemic.

Value of new home loans approved in July

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

First home buyers retreat further

The number of new owner-occupier first home buyer loans dropped 10.7 per cent month-on-month in July.

In dollar terms, the value of new first home buyer loans dropped by $427 million in July, as interest rate rises slashed first home buyer budgets.

Owner-occupier first home buyers in July

Source: ABS Lending Indicators July 2022, released 1 September 2022, seasonally adjusted data.

Fixed loans fall further out of favour

The proportion of fixed loans funded in the month of July was just 5 per cent, in seasonally adjusted terms. This includes both new loans and refinancing.

At the peak in July 2021, 46 per cent of all new loans were fixed.

Source RateCity.com.au, ABS Lending Indicators July 2022, released 1 September 2022, seasonally adjusted data. Includes refinancing.

Average new loan sizes fall in NSW, Qld, WA and ACT

The national average new loan size for owner-occupier dwellings has continued to slide, down 0.12 per cent ($746). That said, compared to a year ago, the average new loan size is up $37,048 or 6.48 per cent.

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

Average new owner-occupier loan size

Source: ABS lending indicators, July 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 value of new lending tanked in July, dropping by a total of $2.62 billion from the previous month.”

“The value of new owner-occupier and investor loans are now lower than they were a year ago, however, both are higher than they were two years ago, when the country was in the early days of pandemic and property prices were on the slide,” she said.

“The dramatic drop in home lending in July echoes what we’re seeing in the property market, where would-be buyers are turning their backs on open homes in droves.

“While rising interest rates are causing havoc on people’s property buying budgets, others are stepping out of the market in the hope of finding a cheaper deal down the track.

“Suddenly, a ‘fear of missing out’ has pivoted to a ‘fear of getting in’, particularly with further property price drops expected in the months ahead.

“Buying a home is one of the biggest purchases you can make. The idea of overpaying and watching property prices drop further is enough to spook even some of the most determined buyers.

“Falling property prices is welcome news for first home buyers, however, many may still find themselves locked out as a result of rising rates.

“First home buyers might not need as big a deposit, but they’ll still have to pass lenders’ serviceability tests – no mean feat when the bank is under instructions to stress test your finances at current rates, plus an additional 3 per cent,” she said.

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