Borrowers take on larger mortgages despite tight lending conditions
The average new loan size for owner-occupiers in Australia has reached a record $666,000, even as the Reserve Bank of Australia’s (RBA) cash rate remains at a 13-year high.
According to the latest Lending Indicator data from the Australian Bureau of Statistics (ABS), loan sizes have increased in every state except Victoria, with the national average rising by $52,000 compared to the December 2023 quarter – equivalent to a daily increase of $142.
Western Australia recorded the most significant jump, with the average new owner-occupier mortgage surging by $98,000 from a year earlier, marking a 20% rise, or $268 per day.
The total value of new home loans climbed by $1.2 billion (+1.4%) in the December quarter compared to the previous quarter. Owner-occupier lending led the increase, rising by $2.2 billion (+4.2%), while investor lending saw a sharp decline of nearly $1 billion (-2.9%). This was the first drop in investor lending since the March 2023 quarter.
First-home buyer activity remained subdued, with 29,788 new loans written in the December quarter. While this was slightly higher than the previous quarter (up by 373 loans), it remains well below the March 2021 peak of 47,899 loans.
Refinancing activity also increased, with 94,916 loans externally refinanced in the December quarter — an increase of 8,883 loans (10%) from the previous quarter.
“It’s incredible to see the average new owner-occupier loan in Australia climb to dizzying heights in defiance of the RBA rate hikes,” said Sally Tindall (pictured above), data insights director at Canstar.com.au. “The fact that the average new owner-occupier loan size is climbing by around $142 a day puts pressure on those still yet to buy.
“Western Australia’s average new loan size for owner-occupiers recorded the biggest rise from the December 2023 quarter, catapulting by almost $100,000 in just 12 months — that’s an average increase of $286 per day.”
Tindall added that while property prices are now starting to cool across the country, any upcoming RBA cash rate cuts could reignite the property market in the months ahead.
“One RBA rate cut won’t see a person’s maximum borrowing capacity rise by a huge amount,” she said. “However, it could inject confidence back into the market, particularly among investors.”
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