Mortgage borrowers continued to retreat in October, with the number of new loans for the construction and purchase of new property hitting the lowest level in over three years.

Figures from Australian Bureau of Statistics showed the number of new owner-occupier financing declined 0.9% in October.

Here are the other lending statistics highlights for the month:

  • The overall value of new loan commitments for housing fell 2.7% in the month.
  • The value of new owner-occupier loan commitments fell 2.9% in October, while the value of new investor loan commitments fell 2.2%.
  • The number of new loan commitments to owner-occupier first home buyers fell 3.2%.
  • First-home buyer loans in October were 47% lower than the January 2021 peak.

ABS finance and wealth spokesperson Katherine Keenan said an interesting finding during the month was the trend in refinancing.

“The RBA cash rate increased 225 basis points between June and October 2022, which coincided with a greater number of borrowers seeking loans with lower interest rates from competing lenders,” she said.

Refinancing between lenders fell 1.3% among owner-occupiers. Despite this fall, monthly owner-occupier refinancing between lenders has remained above $12bn since June 2022, well above pre-pandemic values.

Investor refinancing activity has also remained high.

Housing Industry Association chief economist Tim Reardon said homebuyers continued to retreat from the housing market in October, as rising interest rates diminished their borrowing capacity.

“The RBA has already undertaken its steepest hiking cycle in a generation, lifting their benchmark cash rate by 2.75 per cent in just six months,” he said.

“There is a risk that the RBA will go too far and need to cut interest rates again to support employment across the economy.”

Mr Reardon said the decline in housing finance data coincides with the slowdown in home sales, which have already fallen 37% in the four months to October.

“The risks to household and business finances from such an aggressive hiking cycle are clear — a deep and prolonged trough in home building activity will jeopardise the housing industry’s ‘soft landing’,” he said.


Photo by khunkorn on Canva.