New home and investment property loans on the rise
Property buyers are returning to the market, according to the latest ABS lending data following the Reserve Bank of Australia’s decision to pause the cash rate at 4.1% in October for the fourth month in a row.
According to the national data, a total of $24.82 billion in new home and investment property loans were taken out in August – up by 2.2% from July.
New loan commitments for owner occupier borrowers rose by 2.6% over the month, while investment lending increased by 1.6%.
While the number of new owner occupier loan commitments for dwellings also rose 2.5% in August 2023, the amount remained 12.3% lower compared to last year, according to the ABS Lending Indicators data.
ABS head of finance statistics Mish Tan said since February 2023, the number of new owner‑occupier loans appeared to have returned to levels seen before the COVID pandemic began, although well below the peak in January 2021.
“The number of refinanced owner occupier loan commitments between lenders fell 5.4% to 26,539, after reaching an all-time high last month.
“Since November 2022, the number of refinanced loans has been above the number of new owner‑occupier loan commitments.
“Refinancing has remained at unprecedented levels as households continued to seek better loans amid a high interest rate environment.”
Suncorp Bank head of home lending product Karen Walsh (pictured above left) said the new data showing buyers returning to the market came as no surprise.
“Suncorp Bank home lending data supports the ABS indicators showing that buyers are returning to the market with our volumes of new home lending increasing during the month of September,” Walsh said.
“We also see a strong pipeline of buyers who are in the market but may not yet have secured a property with the majority of applications from owner occupiers.”
According to Suncorp Group’s FY23 results, its home lending portfolio continued its growth momentum with a 9.1% increase, or $4.6 billion.
Canstar group executive, financial services, Steve Mickenbecker (pictured above right) said excluding volatile items such as fruit and vegetables, overseas holidays and petrol, underlying inflation was down in August, encouraging the RBA to await the more robust quarterly inflation data due later this month.
“This makes the November Reserve Bank Board meeting crunch time for borrowers but also buyers eyeing off the market and hoping for a further rate hold,” Mickenbecker said.
“Property prices continue to defy interest rate gravity, but in spite of recent signs of increasing seller interest, price increases appear more underpinned by undersupply than rampant demand.
“In Adelaide, Brisbane and Perth where price growth is highest, supply is still 40% below the five-year average, according to the latest insights from CoreLogic.
“With interest rate cuts not looking likely until well into 2024, repayment affordability will continue to restrain a recovery in new lending growth for quite some time.”
Mickenbecker said new loan approvals were 9.4% lower than in August 2022 so demand was not adequate to support high property prices.
“The fall in average new loan size for owner occupiers to $585,000, which is down 5% from its peak at the start of 2022, is holding down lending volumes.
“With property prices well on the way to recovery, this suggests that buyers have started compromising on the value of the property they are purchasing.”
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