New loan commitments for housing fall 4.4% as rate rises bite

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on August 02, 2022 Fact Checked
New loan commitments for housing fall 4.4% as rate rises bite

The value of new home loan commitments in Australia has dropped 4.4% in a month.

The latest Australia Bureau of Statistics (ABS) data revealed the total value of home loan approvals was $31 billion in June - down from over $32.3 billion in May.

Despite the fall, the ABS said the value of home loan commitments remained at a "historically elevated level".   

The value of new owner-occupier loan commitments fell 3.3% to $20.5 billion, but remained 50.2% higher than the pre-pandemic level seen in February 2020. 

New investor loan commitments also fell 6.3% to $10.5 billion while continuing to remain 101% higher than the pre-pandemic level.  

New loan commitments to first home buyers fell 8% in June 2022 to 9,393, close to the pre-pandemic level in February 2020 of 9,549.  

The number of first home buyer loan commitments fell across almost all states and territories, particularly Victoria (down 11.2%), New South Wales (down 9.4%) and Western Australia (down 13.8%). 

ABS head of Finance and Wealth Katherine Keenan said these falls followed rises in May which were attributed to a clearing of application processing backlogs by lenders. 

The value of borrower refinancing of owner-occupier housing loan commitments between lenders rose 9.7%, reaching a new record high of $12.7 billion in June 2022. 

"The value of owner-occupier refinancing, where the borrower changed lender, was 25% higher in June compared to a year ago,"Ms Keenan said.   

"As interest rates rose in recent months, borrowers sought loans with lower interest rates and lenders competed to attract them." 

Overall, the value of new owner-occupier loan commitments fell across most states and territories.  

Victoria fell 7.1%, following a 6.1% rise in May, while smaller falls were seen in New South Wales (down 2.0%) and Western Australia (down 4.7%). 

Despite seeing increases in both Tasmania and the Northern Territory, the value of new investor loan commitments fell 6.3% nationally.  

New South Wales was down 10.5% ($439 million), Victoria was down 3.4% ($100 million) and Western Australia was down 10.6% ($78 million).  

Queensland, South Australia and the Australian Capital Territory also saw a drop. 

Personal finance 

The value of new loan commitments for fixed term personal finance also fell 15.2% in June 2022, the largest fall in the series with the exception of April 2020.  

Steering the fall was a 14.4% drop in lending for the purchase of road vehicles, as well as a 37.1% fall in lending for personal investment.  

Lending for travel rose 17.6% but was still 6.4% below the pre-pandemic level in February 2020.

Photo by Rodnae Productions via Pexels 

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Georgia joined in 2022 as a finance journalist. With a passion for property, investing and budgeting, she is committed to helping Australians of all ages make informed economic choices in all aspects of life.


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