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First-home buyers remained on the sidelines at the start of the year, as indicated by the fall in their home financing commitments.

Figures from ABS showed that the number of owner-occupier commitments from the first-home buyer segment fell to its lowest since February 2017, down 8.1%.

ABS head of finance and wealth statistics Mish Tan said lending activity from the first-home buyer segment has been on a decline since the peak in January 2021.

“The decline coincided with the winding down of COVID-19 pandemic stimulus measures,” she said.

“Anecdotal feedback from lenders suggested that reduced borrowing capacity due to rising interest rates further dampened overall demand for new housing loans in recent months.”

Overall, the value of new loan commitments for housing went down 5.3% to $22.1bn.

Both owner-occupier and investor segments were less active during the start of the year, with the value of housing loan commitments falling 4.9% to $14.7bn and 6% to $7.4bn, respectively.

The successive rate hikes continue to compel many borrowers to refinance — while the total value of refinancing between lenders went down 1.9% over the month, it remained close to record highs at $12.7bn.


Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
$2,408
Principal & Interest
Variable
$0
$530
70%
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5.94% p.a.
5.95% p.a.
$2,383
Principal & Interest
Variable
$0
$0
90%
5.95% p.a.
5.95% p.a.
$2,385
Principal & Interest
Variable
$0
$0
90%
5.99% p.a.
5.90% p.a.
$2,396
Principal & Interest
Variable
$0
$0
80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of .


Housing Industry Association (HIA) senior economist Tom Devitt said these results continue to reflect the weight of interest rate increases which occurred in 2022.

“There are significant lags evident in this cycle and we are unlikely to see the bottom in this data until the second half of the year, at the earliest,” he said.

A recent study by Australian Housing and Urban Research Institute (AHURI) found that age is the biggest predictor of the risk of entering housing stress, with younger adults more at risk to struggle with housing costs.

Existing borrowers are also prone to stress but an analysis from CoreLogic provides reasons why — generally speaking — borrowers will be able to cope up with rising rates.

Cash rate to hit 3.60% this month

First-home buyers might continue to be not as enthusiastic to enter the market given the further rate hikes expected.

Commonwealth Bank head of Australian economics Gareth Aird said the Reserve Bank of Australia is expected to raise the cash rate again this month by 25bps to 3.60%.

“Our central scenario is that the peak in the cash rate is 3.85%, and we look for 50bps of policy easing in Q4 2023,” he said.

“We expect the unemployment rate to be 4.3% in Q4 2023 compared with the RBA’s forecast of 3.8%. We also expect inflation to recede more quickly, which should open the door for rate cuts in late 2023.”

Economists from other banks are also expecting a 25bps increase this month, with ANZ and NAB projecting a peak of 4.1% cash rate.

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Photo by Andrea Piacquadio on Pexels.