New home loans to first home buyers fell 5.5% in November last year, as the recent rate hikes work to slow lending.
The Australian Bureau of Statistics found total new home loan lending in Australia slid 3.7% to $16.4 billion during the period.
First home buyer loans in November were 51% below their January 2021 peak and 16% below the February 2020 pre-pandemic level.
New investor loan commitments also fell 3.6%
“The number of owner-occupier dwelling commitments also continued to fall in November to below the pre-pandemic level for the first time,” Acting ABS head of Finance and Wealth Dane Mead said.
HIA Economist Tom Devitt said November was the weakest month for new home lending since June 2013.
“This reflects the very well broadcast housing downturn, with new housing loans over the 12 months to November 2022 down by 36.2% on the preceding year.
“Investors and owner-occupiers, alike, are retreating from the market.
“This contraction in lending occurred before the RBA increased the cash rate in December and we expect an ongoing decline in lending as the full impact of the increase in interest rates flows through to households.
“There are long lags inherent in this cycle and the full impact of the increase in the cash rate in 2022 will not be observed until late in 2023.
“The RBA has already undertaken the steepest hiking cycle in a generation, and it needs to hold fire on further hikes to give their actions to date time to play out.”
The impact of rising interest rates and higher loan repayments has made it harder for first home buyers to get a foot in the door.
Canstar analysis showed borrowing power had fallen by 24% since April.
For example, a solo purchaser with an average income of $92,030 had seen their borrowing power reduced by $135,000 since April, while a couple with a dual income of $184,060 had had their borrowing power reduced by $312,000 over the last 10 months.
“Reserve Bank rate increases are doing their job in slowing new lending and stalling the property market, with November lending down by 21.3 percent from April,” Canstar Group Executive Steve Mickenbecker said.
The ABS also found that owner-occupier refinancing rose 9.1% to a new high of $13.4 billion in November.
For mortgage holders, Canstar analysis showed borrowers had faced a 38% increase in home loan repayments from May to November, adding more than $800 to repayments on a $500,000 loan over 30 years.