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The spring selling season was dominated by first home buyers, who now make up almost 40 per cent of all new loans.
Australian Bureau of Statistics’ (ABS) lending data from November has revealed that first home buyers are leading the way for new loans taken out by Australian buyers, in spite of high interest rates.
According to the ABS, $27.58 billion in new home loans were taken out in the month of November, a 1 per cent rise from November. For first home buyers, however, the rate of increase was over double the general average.
“It’s first home buyers who are leading the way with new lending commitments up by 2.8 per cent for the month and 25.8 per cent for the year,” said Canstar lending expert Steve Mickenbecker.
“Looking at the number of buyers, first home buyers’ participation makes up 37 per cent of all new loans,” Mr Mickenbecker said.
The enthusiasm from this cohort is surprising given the rising cost of borrowing in Australia. Analysis from Canstar showed that an average-income, solo borrower “has seen their borrowing capacity fall since April 2022 by $137,000”.
Meanwhile, Mr Mickenbecker reported that “a double-income couple’s budget has been depleted by $331,000”.
Despite this, November 2023 saw the highest number of first home buyers committing to new loans since the Reserve Bank of Australia (RBA) began rate hikes in May 2022.
“First home buyers have in recent years had to weather the impact of rate rises on borrowing power,” Mr Mickenbecker emphasised.
“Purchase of a first home, especially in Sydney, is a hefty challenge, but more buyers are breaking through the ground floor.”
When it came to other segments of the housing market, purchase rates also saw a rise in November, albeit at a slower rate than first home buyers.
Investment lending increased by 1.9 per cent since October 2023, and 18 per cent over the course of the year, while owner-occupier lending rose just 0.7 per cent since October and 13.1 per cent year-on-year.
Since the winter of 2023, rates of mortgage refinancing has been on the decline. According to Canstar, $17.49 billion of home loans were switched to a new lender in November, a decline of almost $4 billion compared to July 2023.
“Borrowers may have decided they can live with higher repayments, but there is no excuse for paying too much below your home loan,” said Mr Mickenbecker.
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