Average mortgage lifts $80,000 in a year

New lending data

New home loans fell by 4.3 per cent in August but they were up 47.4 per cent on the year.

Investor loans rose by 1.5 per cent in August to be up 92.2 per cent on the year.

The average mortgage has lifted by 16 per cent or $80,000 over the past year.

Lending Indicators

• All the top-level indicators are in the accompanying table. The 4.3 per cent fall in new home loans was the biggest in 15 months – since the pandemic-driven lockdowns of 2020. But while NSW and Victoria led the declines in lending, Western Australia, Tasmania and Western Australia also recorded declines in September.

• Reflecting the influence of HomeBuilder cut-off dates, loans for construction have fallen for six months after rising for eight months.

• Investor home loans have now risen for 10 straight months. The value of loans now stands at a 6-year high of $9.5 billion.

• While housing had been an owner-occupier story, investor lending has now doubled in just over a year. So policymakers will be watching the trends for those who are buying or building homes to live in as well as those looking to lock in an investment.

• While renovation loans fell in August, the value of lending was still ranked second to the July result.

• The Reserve Bank will release the semi-annual Financial Stability Review next Friday and investors will be looking at all the references made to housing.

• The Reserve Bank Governor continues to believe that the key to slower growth of home prices and better housing affordability is greater supply of homes and higher wages.

• The average new mortgage for people wanting to buy an existing home to live in is $580,900, up 16 per cent over the past year or an increase of over $80,000. Of course this is an average mortgage across the country. In South Australia the average mortgage is $397,000, now below that of Tasmania. The highest new average mortgage is $760,800 in NSW.

• The average mortgage can be influenced by interest rates, home prices, the size and quality of home purchased as well as changes in wages, wealth and the cost of other items in the household budget. But if the average borrower needs to find an extra $80,000, this may influence future spending and lifestyle choices. There are implications for companies in the consumer discretionary sector.

• Encouragingly for home buyers, the average mortgage fell by $12,700 in the past month – the first fall in six months. Declines in the average mortgage occurred in all state and territories except NSW and Northern Territory.

Published by Craig James, Chief Economist, CommSec