Aussies show waning appetite for new home loans

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Rate hikes appear to be having the desired effect, with the number of Australians wanting to take out a new home loan falling for the second consecutive month in July.

Lending Indicators data released by the ABS on Thursday showed the value of new home loan commitments fell 8.8% in July, nearly doubling the decline from June.

Markets had forecast a decline of -3.6%, but they were, along with the forecasts of leading bank economists, off the mark.

Westpac economists had expected a decline of -4.0% in July, while CommBank economists had expected a drop of -6.0%.

ABS finance and wealth chief Katherine Keenan said the value of new loan commitments to homeowners fell 7.0% in July 2022, while new loan commitments to investors fell by 11.2%.

“Although lending has recently fallen from historically high levels, the value of loan commitments has remained significantly above pre-pandemic levels,” Ms Keenan said.

“Loans to homeowners in July 2022 were 40% higher than in February 2020, while loans to investors were 78% higher.”

AMP chief economist Shane Oliver said that after jumping 28.6% between their pandemic low in September 2020 and their peak in April, average house prices have now fallen by 3.5%.

“(This) is comparable to the four-month rate of decline before the recessions of the 1980s and 1990s and the GFC,” Mr Oliver said.

“The housing boom is well and truly over as soaring mortgage rates cut the rug out for it.”

Mr Oliver notes that assuming the cash rate tops out at around 2.6% at the start of next year, average house prices are expected to fall 15-20% from top to bottom.

“Of which we’ve seen 3.5% so far, with the lowest probably in the second half of next year after interest rates peak and start to fall,” he said. declared.

Has refinancing peaked?

The number of Australians looking to refinance declined in July, following record high refinance numbers and values ​​in June.

Data from credit indicators showed a 1.9% drop in refinance homeowner loan commitments worth $12.4 billion.

Despite the slump, the average mortgage refinance value remained flat compared to previous months, with homeowners refinancing mortgages averaging $482,000 and investors averaging $532,000.

ANZ economists previously forecast the cash rate to climb above the 3% mark by the end of the year, prompting more buyers of variable-rate mortgage homes to face new interest rate hikes.

Speaking to Savings.com.au recently, Unloan CEO Daniel Oertli said there is still time to refinance your home loan now to avoid potentially getting stuck with an average home loan rate.

“There aren’t many things you can do in about 10 minutes that will put about tens of thousands of dollars back in your pocket. So take a serious look. Do your research,” Mr. Oertli.


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Basic criteria: a loan amount of $400,000, variable, fixed, principal and interest (P&I) real estate loans with an LVR (loan-to-value) ratio of at least 80%. However, the “Compare mortgages” table allows calculations to be made on the variables selected and entered by the user. All products will list the LVR with the product and price list which is clearly published on the product supplier’s website. Monthly repayments, once the basic criteria are modified by the user, will be based on the advertised prices of the selected products and determined by the loan amount, repayment type, loan term and LVR as entered by the user. user/you. *The comparison rate is based on a loan of $150,000 over 25 years. Please note: this comparison rate is only true for this example and may not include all fees and charges. Different terms, fees or other loan amounts may result in a different comparison rate. Rates correct as of August 31, 2022. See disclaimer.


Image by Andrea Piacquadio via Pexels

The whole market has not been taken into account in the selection of the above products. Instead, a reduced portion of the market was considered. Products from some vendors may not be available in all states. To be considered, the product and price must be clearly published on the product supplier’s website. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au and Performance Drive are part of the Savings Media group. In the interest of full disclosure, Savings Media Group is associated with Firstmac Group. To learn how Savings Media Group handles potential conflicts of interest, as well as how we are paid, please visit the website links at the bottom of this page.

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