The value of new housing finance commitments has fallen for the third month in a row but refinancing is going through the roof as borrowers shop around for better deals. Refinancing for owner occupiers was a record.
According to the latest Australian Bureau of Statistics lending data, the value of new housing loan commitments fell 3.4 per cent in August, compared with the previous month. The A$27.4 billion of new lending was down 12.5 per cent on the same time last year.
The fall in August follows falls of 8.5 per cent in July and 4.4 per cent in June.
The value of new lending to owner occupiers was down 2.7 per cent month-on-month and down 15.1 per cent over 12 months.
New lending to residential property lenders was down 4.8 per cent month-on-month and down 6.4 per cent over 12 months.
Average loan size also fell for the third month in a row. After peaking at $615,054 in May, average loan size has fallen 4.2 per cent to $589,141.
Going against the trend, the number of new loan commitments to first home buyers rose 10.4 per cent in August. However, the 9258 first home buyer loan commitments was well below the recent peak of 16,330 in January 2021.
While new lending was down, external refinancing rose sharply. The value of external refinancing rose 5.3 per cent to $18.9 billion in August. Refinancing was up 9.8 per cent over 12 months.
The $12.8 billion of refinancing for owner occupiers was a record.
For most of the past 20 years the value of external refinancing has ranged between $5 billion and $10 billion a month but in the past couple of years it has taken off.
This may reflect the growing dominance of brokers in the mortgage market, who encourage their clients to review their loans regularly. Or it may be that borrowers have been persuaded by the urgings of the ACCC and the RBA to look for better deals.
Reserve Bank data show that lenders’ mortgage balances grew by 0.5 per cent in August and by 7.6 per cent over the 12 months to August. This is the lowest annual growth rate since January 2021.
Owner occupier loan balances were up 0.6 per cent month-on-month and 8 per cent over 12 months.
Investor loan balances were up 0.5 per cent month-on-month and 6.6 per cent over 12 months.
And according to the latest APRA lending data, all the big banks are growing around system, except ANZ which is growing its mortgage book at about half the rate of system growth.
Some lenders have found the competitive pressure hard to handle. Bank of Queensland’s book reduced by 0.1 per cent in August and grew by around one-third of system over the past three months.
Other lenders that suffered runoff in August included Challenger Bank, Great Southern Bank, HSBC and ING, whose book has shrunk by 1.3 per cent over the past three months.