Home lending hits new high as established homes get boost from owner occupiers

Woman looking at homes

Despite skyrocketing house prices, home buyer demand hasn’t faltered at all but the types of Australians joining the market are changing. 

As the latest Australian Bureau of Statistics (ABS) data reveals, new home loan commitments hit another record high last month, rising by 3.7% to $31 billion.

Owner occupiers continued to make up the bulk of those new home loans, contributing to $23 billion or nearly three-quarters of the total amount committed in April. This figure is up 4.3% from March.

ABS’s head of finance and wealth, Katherine Keenan said the rise in owner occupier lending is a result of increased loan commitments for existing dwellings, which surged 9.2% last month. In other words, with the HomeBuilder grant expiring, owner occupiers are increasingly shifting their focus from newly constructed homes back to established homes.

“Loan commitments to owner occupiers for the construction of new dwellings fell by 11.4 per cent [in April], following a fall of 14.8 per cent in March. These were the first monthly declines since the Homebuilder grant was introduced in June 2020,” Keenan said. 

“However, the value of construction commitments remained at a high level.”

A growing number of investors also came out of ‘hibernation’ after a lull in participation last year. New loan commitments for this borrower group jumped by 2.1% to $8.1 billion in April - the highest level since mid-2017. 

RELATED: Does a 3-year lending high signal the return of property investors? 

On the flipside, the number of first home loans fell for the third month running to 15,171, in part because more and more first home buyers are being shut out of the market by high prices and low supply. But the ABS notes that first loan commitments are still at a 12-year peak despite this decline.

Why are home lending values so high?

While strong home lending figures indicate an overheated property market with lots of buyer interest, that’s not the only factor to consider in this equation.

There is also a trend of home buyers now having to borrow more money from the lender to afford property, which pushes up the value of new home loan commitments too.  

Mozo’s number crunch, for instance, reveals that the average new home loan size for owner occupiers last month exceeded $500,000 for the first time in the ABS series, sitting at $504,859. One year ago, the average loan was $58,087 smaller.  

Besides this, competitive interest rates continue to be a huge incentive for many home buyers. Thanks to the Reserve Bank’s decision to hold the official cash rate at a record low 0.10% for seven months now, lenders have also kept their rates fairly low. 

Here’s a snapshot of average rates in the Mozo database for owner occupiers as of 7 June 2021, compared to two years ago:

Loan TypeJune 2021June 2019Difference
1-year fixed2.33%3.96%-1.63%
2-year fixed2.27%3.85%-1.58%
3-year fixed2.31%3.91%-1.60%
4-year fixed2.50%4.33%-1.83%
5-year fixed2.72%4.32%-1.60%

For a more detailed look at home loan rates and trends, check out our home loan statistics page. Or if you’re ready to shop around for a great deal, head on over to our home loans comparison hub to get started today.

Compare home loans - last updated 25 June 2022

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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