Home Loans Fall Despite Continued Property Price Boom | Cowra Guardian
The closures in the south-east of the country have led to a decline in new mortgage commitments, despite the continued surge in domestic property prices.
The latest loan data from the Australian Bureau of Statistics shows home loans fell 4.3% nationwide in August, with the biggest declines being felt in the homeowner category, which fell by 6.6%.
The drop in lending was sparked by lockdowns encompassing ACT, Victoria and New South Wales. This has held back the majority of real estate sales.
In August, $ 30.76 billion in new loans were settled, at a time when a significant amount must be borrowed to acquire a property.
Compared to a year ago, figures from RateCity show the average amount borrowed in NSW increased by $ 111,873, while in ACT it jumped by $ 47,303.
RateCity’s research director, Sally Tindall, said increasing borrowing sizes would likely prompt the prudential regulator to implement stricter lending criteria to ensure people don’t overburden themselves too much debt.
“Soaring house prices have caused some people to borrow more than they ever imagined,” Ms. Tindall said.
“The problem will only get worse if the market continues to rise. APRA’s expected intervention is likely to help cool house prices, but loan ceilings have the potential to hit harder. first-time buyers unless specific arrangements are made for them. ”
The Board of Financial Regulators and Treasurer Josh Frydenberg have flagged potential crackdowns to calm the boom and house prices.
The council reported that ultra-low interest rates, combined with huge housing demand driving up prices, are pushing debt-to-income ratios to worrying levels.
ANZ said investor loans continued to rise and were at a six-year high, while personal loans rose 2.5% in the month.
Adelaide Timbrell, ANZ Senior Economist, said: “As investor loans increased in most states, Queensland investor loans were by far the strongest at 13.6% mo, driven by loans for the purchase of existing housing. ”
RateCity’s Ms Tindall said Australians continue to refinance loans to try to take advantage of lower rates, with some fixed options now generating deals as low as 1.59%.
“The lockdowns have been particularly successful in encouraging people to refinance,” she said.
“Fixed rates hit a new high of just 1.59% last month. That’s enough to make even the most complacent borrower at least ask about their mortgage rate.”
Ms Tindall noted that the level of loans to first-time homebuyers was dropping and this was likely due to house prices now exceeding borrowing capacity.
“First-time home buyers are dropping like flies and that’s a concern,” she said. “They had a good run throughout 2020, but many are now finding that the market has jumped well beyond their borrowing capacity.”