Loan commitments to first home buyers fell for the eighth consecutive month in September 2021 - 11.4% lower compared to September 2020 in seasonally adjusted terms.

Overall owner occupier loan commitments fell 2.7%. 

This is contrasted with investor lending, up 1.4% to $9.62 billion, with positive growth unbroken since October 2020.

The value of investment lending was 83% higher than a year ago, and close to records seen in April 2015 when investors borrowed $10.08 billion.

ABS head of finance and wealth, Katherine Keenan, said the average loan size for owner occupiers has grown, however.

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

"However, this was 21% higher compared to a year ago and 49% higher than pre-COVID levels in February 2020."

CommBank economists said lending to first home buyers is down 22.9% compared to the peak in January.

"Affordability constraints are biting in the first home buyer space, with dwelling prices rising by over 20% on an annual basis," they said.

NSW residents borrow big

NSW owner occupiers borrowed an average of $750,000 in September - a record high.

Across other states, Victoria led the falls in loan commitments, with owner occupier lending down 12.7% and first home buyers down 17%. 

Investment lending in Victoria, however, was up 1.4%.

"Similar to overall owner-occupier lending, the largest fall in the number of first home buyer loan commitments was in Victoria which fell 17%," Ms Keenan said.

"New South Wales fell 3.1%. Western Australia had the largest rise of 5.9%, while Queensland rose 2.1% and South Australia rose 4.3%."

Refinancing tapers

For owner occupiers, the value of external refinancing fell by just over $1 billion to $10.62 billion in September, in original terms. 

Internal refinancing also fell, down to $5.84 billion.

This made for an average refinancing value of just under $469,000. 

For investors it was much the same, with total refinancing down to $9.48 billion for an average value of $520,389.

Lendi Group CEO, David Hyman, said the ABS data shows only 7.4% of active mortgages had been refinanced over the past financial year.

"This lack of action could cost Australians down the line, when they finally come to the realisisation that the low rates they once overlooked are no longer on offer," Mr Hyman said.

"History dictates that interest rates will not stay this low forever, and mortgage holders need to start preparing for this. The recent rates are as good as we’re likely to see for some time, while we've already stared to see an uptick in fixed rates by some lenders."

Image by mastersenaiper on Pixabay



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