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Lockdown puts the brakes on new home lending but mortgage sizes blowout

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

AmountMonthly changeYear-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 
highest since April 2015

$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

AmountMonthly changeChange 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 2021Monthly changeYear-on-year changeChange 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-21Month-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.

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This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.

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