More Declines to Come: Home Loan Statistics Are Experiencing a Downward Sloping Activity

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The RBA’s relentless rate hikes are beginning to hit homebuyers, as alarming new data demonstrates how rapidly things have changed.

Records have shown that since December 2020, new home loans are now at their lowest value. According to new data released by Rate City, Australia’s leading financial comparison website, mortgages of $25.79 billion were authorised in October.

Compared to last year’s record, October’s data reveals a 17.1 per cent decrease in the past year. Additionally, it is a 2.5 per cent fall since September.

“The market for new home loans is continuing to slide, alongside cooling property prices,” Rate City Research Director Sally Tindall warns of the expected declines shortly.

“Seven consecutive RBA hikes has borrowers spooked, and with another hike coming, potentially as soon as Tuesday, there’s likely to be further drops in lending to come,” she added.

While many would-be buyers’ budgets have self-combusted at higher rates, others keep a careful eye on the drops, hoping to get a deal when prices bottom out.

In terms of first homebuyer loans, it plummeted even more, with 3.2 per cent in the previous month and a whopping 26 per cent from last year.

RBA’s constant rate hikes have two sides, as per Ms Tindal. The scenario has both positives and negatives. 

“The drop in property prices means first home buyers no longer need to save as much for their all-important deposit, but they’ll still have to prove to the bank they can pay the mortgage at higher rates.

Even though refinancing may experience a drop this month, Tindall said it is still close to record highs. For the record, the $17 billion accumulated loan worth is refinanced in just a month.

“Banks are throwing everything but the kitchen sink at customers willing to move their mortgage on to their books, with rate discounts and cashbacks at the ready to woo new business,” she said.

Borrowers are fleeing fixed mortgages in more significant numbers as the RBA boosts interest rates.

Only 4% of new and refinanced lending picked a fixed-rate contract in October.

This represents a significant reduction from July 2021, when 46% of all new and refinanced loans were fixed.

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