Homes Loans Out of Owner Occupiers’ Reach


Lending indicators show affordability is the biggest hurdle for buyers, as owner-occupiers and first home buyer numbers fall and the market waits for the November cash rate announcement.

The value of new loan commitments fell 1.4 per cent, driven by owner-occupier commitments, which were down 2.7 per cent in the September Australian Bureau of Statistics results.

This was further evident by the number of first home buyers ,which dropped, for the eighth consecutive month, at 5.6 per cent in September—11.4 per cent lower compared to last year.

The data showed while owner-occupier lending was on its way down, it was still above pre-pandemic levels and investor commitments were on the rise, up 1.4 per cent.

The data for owner -occupiers was overwhelmingly led by Victoria where the value dropped by 12.7 per cent.

This comes as the value of homes increases 12 times faster than wages and prices hit new highs.

Reflecting prices, the average loan size for owner-occupiers to build, buy new or purchase existing rose slightly, with NSW reached a record high of $750,000.

New loan commitments

ValueSept 2021 ($b)Monthly chanteYear changeNumberMonthly changeYear change
Owner occupier20.69-2.7%20.8---
Construction of new dwellings2.32-5.0%-11.3%4679-5.5%-21.8%
Newly erected buildings1.31-6.0%10.7%2317-7.2%-4.0%
Existing dwellings15.71-2.4%33.6%27341-3.5%15.6%
First home buyer5.45-1.9%1.0%11848-5.6%-11.4%

^Source: Australian Bureau of Statistics, September 2021, seasonally adjusted

This compared to the average for both owner-occupiers and investors around $530,000.

The Reserve Bank of Australia is expected to announce the new cash rate today which could impact the number of new loans, while regulators have increased the serviceability to 3 per cent.

CBA senior economist Belinda Allen said the latest ABS results reflected borrowing before the changes.

“This fall predated the changes to the minimum interest rate that serviceability is assessed against,” Allen said.

“We don’t anticipate any major impacts to lending, given that according to CBA data, just 8 per cent of home loan customers borrow at capacity.”

ABS head of finance and wealth Katherine Keenan said borrowing levels were still elevated, despite the recent drop.

“The value of new loan commitments for owner-occupier housing fell for the fourth month in a row, to $20.7 billion in September,” Keenan said.

“However, this was 21 per cent higher compared to a year ago and 49 per cent higher than pre-Covid levels in February 2020.”

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