Refinancing still near record highs
The number of new owner-occupier first-home buyer loan commitments fell 8.1%, or $610 million, in January to its lowest level since February 2017, according to new data from the Australian Bureau of Statistics.
“Owner-occupier first-home buyer lending continued to decline from the high reached in January 2021,” said Mish Tan, ABS head of finance and wealth statistics. “The decline coincided with the winding down of COVID-19 pandemic stimulus measures. Anecdotal feedback from lenders suggested that reduced borrowing capacity due to rising interest rates further dampened overall demand for new housing loans in recent months.”
The overall value of new loan commitments for housing dropped 5.3% to $22.1 billion in January.
The value of total new owner-occupier loan commitments slipped 4.9% to $14.7bn, while new investor loan commitments were down 6% to $7.4bn.
The value of owner-occupier housing loan refinancing between lenders slipped 1.9% but was still near record highs at $12.7bn, as borrowers continue to switch lenders for lower interest rates as RBA’s cash rate rises.
Meanwhile, the value of total new loan commitments for fixed-term personal finance grew 0.5%.
Lending for the purchase of road vehicles fell 0.4%, lending for the purchase of household goods rose 6.2% to another record high, and lending for travel and holidays lifted 0.9% to the highest level since late 2018.
The ABS lending data comes as new Equifax data revealed that mortgage demand has continued to decline in early 2023.
“Equifax data for January shows mortgage demand is down 15% compared to the same month in 2022,” said Moses Samaha (pictured above), EGM of product, marketing, and sales at Equifax. “Of the mortgage enquiries recorded in January, refinancing activities dominated demand as existing mortgage holders search for options to help them combat the impact of rising interest rates.”
Samaha also noted that financial stress is now starting to impact secured debt, after an increase in personal loan arrears in Q4 2022.
“Mortgage arrears for December 2022 have surpassed December 2021 as consecutive rate hikes and rising cost of living hit households,” she said. “Equifax data shows that first home buyers are bearing the brunt of financial stress more than other mortgage holders, with this group more than twice as likely to be in arrears versus non-first home buyers.”
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