Number of loans to first-home buyers is growing

Font size :

Number of loans to first-home buyers is growing

While property investors dominated the mortgage lending market at the start of this year, the tables have since turned and first-home buyers have since gained the ascendancy, according to the latest data from the Australian Bureau of Statistics (ABS).

Investors, weighed down by targeted interest rate hikes by the lenders, were in retreat for the third consecutive month, with the value of their loans falling by a solid 3.9% to $12.1bn.

In seasonally adjusted terms, the value of owner-occupier loans edged up by 0.9% to $21bn, while overall commitments to buy slipped by 0.9%.

The buyers who’ve seen the biggest growth are now first-home buyers, with the number of loans to this sector jumping by 5.2% over the month.

As has been the case in every month of this year, first-home buyers have carved out a larger slice of the market for themselves.

Having started this year on a historic low with just 13.4% of all loan commitments, by July, this percentage had risen to 16.6%.

Over the month, the average first-home buyer loan rose by $4,000 to $321,800.

At the same time, the average loan size for all owner-occupied housing commitments dropped by $5,000 to $370,500.

“It looks like some stamp duty exceptions for first homebuyers following the 2017/18 round of state budgets has had a positive impact on first home buyer activity,” said Gareth Aird, senior economist at Commonwealth Bank of Australia (CBA).

Overall, significant weaknesses are becoming apparent in the property market, according to Henry St John, analyst at JP Morgan.

“The average loan size for owner-occupiers contracted for a second consecutive month, having fallen from a local peak of $380,000 in May to $371,000 in July," St John said.

“Refinancing activity, which in the owner-occupier component of the data requires mortgage holders to have shifted from one bank to another, fell 0.7 per cent in volume terms, and is now running at -16.8 per cent over the year,” St John added.

This pattern appears to align with anecdotal evidence which suggests that as the banks  continue to tighten their mortgage pricing, more restrictive lending standards will make it increasingly difficult to shift mortgages from one bank to another.

St John added that investor lending has gradually weakened over the past six months.

“Investor lending values have now declined 11.3 per cent over the last 6 months, and the annual run rate is now effectively flat,” he said. “This is consistent with the slowdown in investor credit which we have observed in recent months, and July's numbers suggest that there is scope for investor credit to continue to grind its way lower as we approach year-end.”
 

With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now

Mortgage News and Articles

How to tell when a housing market is cooling How to tell when a housing market is cooling

You need to check clearance rates, listings, and the price gap, among other factors Read more

Growing demand for green apartments in Sydney Growing demand for green apartments in Sydney Both owner-occupiers and investors favour eco-friendly buildings for their energy-saving features and reduced environmental footprint ... Read more

Are property investors as rich as they appear? Are property investors as rich as they appear? A multi-property portfolio doesn’t guarantee easy millions ... Read more

Be proactive about getting a better mortgage deal Be proactive about getting a better mortgage deal Apathy could be costing you a considerable amount of money over the lifespan of your loan ... Read more

More mortgage news and articles

Sponsored Links

Thursday, Sep 21, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Let us help you find the right home loan for your needs.

Tell us a bit about your circumstances:
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords