Australian mortgage sizes continue to grow

author-avatar By on March 01, 2021
Australian mortgage sizes continue to grow

The latest lending indicators data shows Australian owner occupier mortgage sizes grew by $4,242 in one month.

The average owner occupier mortgage size, in original terms, was $481,790 in January, up from $477,548 according to the latest Australian Bureau of Statistics' (ABS) data. 

While there was a pullback in the number of owner occupier loans written - after a December rush due to HomeBuilder being scaled back in January - the average mortgage size continues to grow.

ABS data also shows that first home buyers also continued to flood the market in January, up 9.6% from December's figures in seasonally adjusted terms.

This represents the highest level of first home buyer growth since May 2009, and first home buyers accounted for 36.5% of all owner occupier loans written in January.

In seasonally adjusted terms, first home buyer numbers are up 70.8% compared to a year ago, and are also borrowing an average of $429,669.

ABS head of finance and wealth Katherine Keenan put some of the growth down to HomeBuilder.

“Since the HomeBuilder grant was introduced in June 2020, there have been record rises in the value of construction loan commitments," she said.

"Loan applications made late in 2020 (prior to the reduction of the HomeBuilder grant on 1 January 2021), contributed to the strong rise in January’s construction loan commitments of 15.7%.”


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

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval

VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^

Rates correct as of October 27, 2021. View disclaimer.

Housing Industry Association economist Angela Lillicrap said the pandemic has changed Australians' spending habits.

"Many have diverted funds that would have typically been spent on travel and entertainment into improving their homes," she said.

"Low interest rates, rising house prices, higher savings and a demographic shift in demand towards detached housing and regional areas should ensure ongoing demand for new homes into 2021."

ABS data coincides with the CoreLogic home value index growing at its fastest rate in 17 years.

See Also: What is a housing bubble, and is Australia in one?

Variable loans funded continued to be more popular than fixed rate loans, at $23.8 billion worth, compared to $14.3 billion in January.

However the gap is narrowing for first home buyers, with $2.88 billion in variable loans funded versus $2.24 billion in fixed rate loans funded.

Prudential regulator data released last Friday also shows that the number of mortgage deferrals continues to slide, representing just 1.8% of the overall Australian mortgage market as at the end of January.

This is down from highs of 10-11% seen in May and June last year, however high loan-to-value ratio (LVR) borrowers are over-represented in deferral data - making up 11% of deferrals, yet only 6% of the wider loan market.

Approximately $14 billion in loans (both residential and small business lending) exited deferrals in January, while $1 billion entered or extended their deferrals.

A new way to invest in 'affordable' housing

Fragmented property platform Bricklet has partnered with Evolve Housing to allow Australians to invest in affordable housing. 

The partnership will initially allow fragmented investors to invest in 18 affordable housing apartments in Rydalmere, in Sydney's west.

Each apartment consists of 30 'fragments', and each fragment is priced at $21,400, implying a unit price of $642,000.

CEO of Bricklet Darren Younger said there is a "shortfall in investment" in affordable housing.

"By fragmenting affordable housing supply into affordable bricklets, we can incentivise new investors into the sector, giving everyday Australians the ability to fund the housing projects Australia so desperately needs," he said.

Property management rests on affordable housing providers, such as Evolve Housing, and there is scope to expand the scheme nationally. 

'Fragmented' property platforms, such as Bricklet, differ from 'fractional' platforms in that investors are buying real estate with a title, instead of investing into a trust that then invests in property.

Bricklet's fee is typically 6% of the fragment price, which includes stamp duty and conveyancing. 

rydalmere

Image: Bricklet/Evolve Housing


Photo by Marc RR Dorda on Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*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.

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author-avatar
Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison is passionate about breaking down complex financial topics for the everyday consumer.

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