New OO loans increase for the first time since May

Following a softening in new mortgage lending and a refinancing boom, new data from the Australian Bureau of Statistics (ABS) showed that new home loan lending has begun to increase again.

The ABS’ Lending Indicators data for August 2023 showed that there were 25,404 new owner-occupier mortgages written over the month, the highest figure since May 2023 (when 26,301 owner-occupier mortgages were written).

The value of new housing loan commitments also rose over the month, increasing by 2.2 per cent to just under $25 billion ($24.8 billion) in August 2023, with owner-occupier lending up 2.6 per cent to $16.07 billion.

However, the average loan size for owner-occupier dwellings fell 1.4 per cent nationally from $593,000 to $585,000, according to the ABS, but was still 21.8 per cent higher compared to the pre-pandemic average seen in February 2020.

The state with the greatest value of owner-occupier borrowings was NSW, which had a 2.1 per cent increase to just over $5 billion, followed by Victoria with a 4 per cent increase to $4.5 billion, Queensland ($3.1 billion), and Western Australia ($1.7 billion). South Australia also broke the $1 billion milestone for its overall value of owner-occupied borrowings, with a 12.9 per cent increase over the month.

Only the ACT saw a decrease in owner-occupier lending in August, down 3.3 per cent to $400 million.

The head of finance statistics at the ABS, Mish Tan, noted that the increase had seen loan figures return to pre-pandemic levels, but was still considerably below the national peak in 2021: “Since February 2023, the number of new owner-occupier loans appears to have returned to levels seen before the COVID-19 pandemic began, well below the peak in January 2021.”

Investor lending also increased in August, rising by 1.6 per cent (or $136 million) to $8.75 billion.

Western Australia saw the greatest growth (14.1 per cent), up by $102 million in the month, followed by NSW with a rise of $44 million, up 1.3 per cent.

Queensland and the ACT saw the largest decreases, falling $78 million (4.2 per cent) and $16 million (8.1 per cent), respectively.

External refinancing drops

The month of August also saw owner-occupier refinance activity drop to 26,539 loans, after reaching a record high in July, when 28,041 refinances were undertaken amid the ongoing fixed-rate cliff.

The value of external refinancing for total housing fell 3.9 per cent to $20.6 billion, owner-occupier refinances fell 3.3 per cent to $14 billion and investor refinances fell 5 per cent to $6.6 billion.

Despite the monthly falls in each category, the values were still over 12 per cent higher when compared to a year ago.

Ms Tan added: “Since November 2022, the number of refinanced loans has been above the number of new owner-occupier loan commitments.

“Refinancing has remained at unprecedented levels as households continued to seek better loans amid a high-interest rate environment.”

The positive figures come as the value of housing also saw another gain in August, with CoreLogic’s national Home Value Index (HVI) revealing a sixth consecutive monthly rise, up 0.8 per cent.

Commenting on the new ABS figures, ANZ senior economist Adelaide Timbrell said that housing lending may continue to rise “modestly” as the housing shortage supports housing prices and keeps rental vacancies low.

She added that “household cash flow pressure from inflation and interest rates and the continuation of the fixed-rate roll-off may keep external refinancing elevated through the rest of the year.”

[Related: Weakest demand for credit since 2005: ABS]