Home loan commitments decline from record highs

The value of new home loan commitments fell 3.7 per cent to $32.3 billion in February after a record high in January, according to new data from the Australian Bureau of Statistics (ABS).

ABS head of Finance and Wealth, Katherine Keenan, said all states saw a drop in owner-occupier loans led by Sydney and Melbourne.

“February’s fall in new housing loan commitments was driven by a 4.7 per cent fall in the value of new owner-occupier loan commitments, the first since October 2021,” Ms Keenan said.

“The value of new owner-occupier loan commitments was 1 per cent lower than February 2021, but owner-occupier lending was 55 per cent higher than February 2020.”

The largest decline in owner-occupier loans came from New South Wales (down 10.5 per cent), Victoria (down 5.2 per cent) and the Australian Capital Territory (down 23.6 per cent), where property prices had been rising the fastest in 2021.

The number of new loans to first home buyers fell 8.3 per cent in February 2022, which was 36.7 per cent lower compared to a year ago, and continued the decline seen since the recent peak in first home buyer lending in January 2021.

Loans to first home buyers declined in all states and territories, with New South Wales (down 15.5 per cent), Victoria (down 5.9 per cent) and the Australian Capital Territory (down 31.9 per cent) seeing the largest falls.

“While remaining close to the record high seen in January, investor lending also fell in February,” Ms Keenan said.

“The value of investor loan commitments fell 1.8 per cent to $10.8 billion. 

“This was the first fall in investor lending since October 2020.”

Loans to investors also declined in most locations, driven by New South Wales (down 5.5 per cent), Queensland (down 2.6 per cent) and the Australian Capital Territory (down 11.9 per cent). Victoria was flat while Western Australia rose 6.8 per cent and Tasmania rose 2.8 per cent.

The number of variable-rate loans rose 12.2 per cent to $33.5 billion in February, while fixed-rate loans fell 17 per cent to $13.1 billion. 

As fixed interest rates increased in recent months, the proportion of fixed-rate loans compared to all loans funded in the month fell from a peak of 46 per cent in July 2021 to 28 per cent in February 2022.

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Rowan Crosby

Rowan Crosby is a freelance journalist specialising in finance and real estate.