Australian mortgage sizes continue to grow

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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

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • 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%
UNLIMITED REDRAWSSPECIAL 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%
Variable
More details
AN EASY DIGITAL APPLICATION
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
AN EASY DIGITAL APPLICATION

Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • 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
Variable
More details
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.

Variable Home Loan (Principal and Interest)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services

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. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. 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 May 25, 2022. 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

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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 strives to deliver and edit news and guides that are engaging, thought-provoking, and simple to read.

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