New home loans plunge as housing market cools

The value of new home loans fell by $2.13 billion in April, according to ABS Lending Indicators released today.

New loans to homeowners fell $1.57 billion month over month and $2.92 billion from a year ago, in seasonally adjusted terms.

Meanwhile, loans to investors fell $557 million from the previous month, but were up $3 billion from April last year.

Value of new home loans approved in AprilSource: ABS Lending Indicators April 2022, published June 3, 2022, seasonally adjusted data. The annual variation is from April 2021 to April 2022. Excludes refinancing. research director Sally Tindall said: “Buyers are pulling out of the market as property prices start to fall.”

“New lending has plunged as masses of potential buyers put their plans on hold waiting to see what impact interest rate hikes will have on the housing market,” she said.

“Investor lending saw its biggest decline since May 2020, when buyers fled the market at the start of COVID as real estate forecasts looked bleak.

“Many investors are again putting their plans on hold while they see how far rates will rise and whether the unfavorable house price forecast materializes,” she said.

The number of home buyers fell by 34% in one year

The number of first-time homeowner loans fell 34.3% in April from a year ago.

Month over month, the number of first-time home buyers is down 4.4%.

Homeowners first time in April

First-time home buyers

Source: ABS Lending Indicators April 2022, published on June 3, 2022, seasonally adjusted data.

Sally Tindall said: ‘It’s been hard work for first-time homebuyers trying to get into an overinflated property market, so it’s no surprise to see those numbers come down.’

“While it’s been a bleak year for first-time home buyers, with investors retreating now, they could finally get their foot in the door in the coming months if prices drop.

“The new government’s programs, which include home purchase assistance and the housing guarantee scheme, will enable some people to move up the property ladder. However, buyers should be aware of the risks of buying a new home in a down property market with a small deposit,” she said.

New Fixed Rate Loans Continue to Fall as Rates Rise

“With fixed rates rising rapidly, the number of borrowers choosing to repair their loan has continued to fall,” said Sally Tindall.

“The proportion of fixed loans funded in April was only 16%; down from the July 2021 peak when 46% of all new loans were fixed.

“The lowest average 3-year fixed rate of the big four banks has risen nearly 3% over the past year. It’s no wonder Australians have turned their backs on fixation,” she said.

Fixed v Floating April ChartSource: ABS Lending Indicators April 2022, published on June 3, 2022, seasonally adjusted data.

The national average mortgage size is now nearly 20% higher than it was two years ago

The national average new loan size for owner-occupied housing is now $611,154, nearly $100,000 more than two years ago.

In New South Wales, the average mortgage size is more than $140,000 higher than it was in April 2020 and in Victoria it has increased by more than $106,000 during this period.

In Queensland, the average mortgage size is 28.7% higher than two years ago, while the biggest percentage increase was in Tasmania, where it rose by 35%. 9%.

However, as real estate prices are expected to fall in the coming months, it is likely that the average size of new loans will also decline.

Average amount of loans to new homeowners

State-by-state loan amountSource: ABS Lending Indicators, April 2022, original data for owner-occupied dwellings. Includes construction and purchase of new and existing housing.

Priscilla C. Carnegie