ABS lending indicator data released Friday revealed the value of new home loan commitments fell 5.3% in January 2023, with new home loans written in the month amounting to $22.1 billion.

This marks the 12th consecutive month of declines.

The value of total new owner-occupier loan commitments fell 4.9% to $14.7 billion, while new investor loan commitments fell 6.0% to $7.4 billion.

Despite the value of owner-occupier refinancing decreasing by 1.9% in January, it still remained high at $12.7 billion, third only to the all-time high seen in November 2022.

This comes as borrowers continue to switch lenders in a bid to find lower interest rates and cashback incentives given the current rate rise uncertainty. 

The average loan size for owner occupiers decreased slightly from last month, now at $601,000.

Fixed-rate loans made up a slightly higher proportion of lending, at 6.41% of the market including refinancing.

Major bank economists were off the mark in forecasting housing finance figures for January, with ANZ and Westpac economists both tipping a 4.0% decline.

ANZ Senior Economist Adelaide Timbrell said housing price declines are suppressing listings and are likely to reduce loan sizes, putting downward pressure on total lending.

“While housing prices barely fell in February according to the CoreLogic home value index (-0.1% month-on-month), we expect that housing prices will fall by 10% year-on-year in 2023, as further rises in the cash rate hit borrowing capacity,” Ms Timbrell said.

“Strong net migration through 2023 should limit the ultimate fall in lending by increasing housing demand and incentivising new builds.

“Though the fall in building approvals in January puts some doubt on how much additional supply – and purchases – will eventuate.”

Experts tip national home values to fall by 15-20% by the end of 2023.

AMP senior economist Diana Mousina said 62% of all outstanding mortgages were settled in the past three years, and these borrowers are most sensitive to rate rises.

Australian household debt as a share of income is sitting around a record high at 189% of income, which is significantly above most of our global peers and the majority of this debt is in housing," Ms Mousina said.

"This makes Australian households vulnerable to changes in home prices and interest rates, with the risk of mortgage stress increasing as home prices fall and interest rates are increased."

First home buyer loans on a downward spiral 

First home buyer loans fell to a five-year low in January, declining by 8.1% to 6,956. 

This figure is 57.5% lower than the January 2021 high and 27.5% lower than the pre-pandemic level seen in February 2020.

“Owner-occupier first home buyer lending continued to decline from the high reached in January 2021,” said Miss Tan, ABS Head of Finance and Wealth.

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

“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.”

State by state, the number of first home buyers in January fell:

  • Victoria -11.5%
  • New South Wales -12.7%
  • Queensland -8.9%
  • Western Australia -3.7%
  • Tasmania -8.4%
  • South Australia -1.5%

The ACT and Northern Territory both recorded increases of 21.3% and 20% respectively, however these are smaller and more volatile series.

Westpac economists predict first home buyer lending will flip in February, given the introduction of the First Home Buyer Choice scheme in NSW.

See Also: The 5 NSW property regions first home buyers should have on their radar

Advertisement

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
Filters
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%
 Featured Online ExclusiveUp To $4K Cashback
  • Immediate cashback upon settlement
  • $2,000 for loans up to $700,000
  • $4,000 for loans over $700,000
5.99% p.a.
5.90% p.a.
$2,396
Principal & Interest
Variable
$0
$0
80%
 Featured Apply In Minutes
  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
5.99% p.a.
6.51% p.a.
$2,589
Principal & Interest
Variable
$0
$530
90%
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 . View disclaimer.

Image by Keagan Henman via Unsplash



Ready, Set, Buy!


Learn everything you need to know about buying property – from choosing the right property and home loan, to the purchasing process, tips to save money and more!

With bonus Q&A sheet and Crossword!

Download Free
By subscribing you agree to our privacy policy