Home loans are getting larger as Aussies struggle to keep pace with rising interest rates and ongoing affordability pressures.
In fact, the average loan size across the country jumped nearly 11%, in the March quarter, or up by almost $68,000, year-over-year, according to a recent report from Mortgage Choice, dubbed the "Mortgage Choice Home Loan Report."
“The national average loan size has been steadily on the rise, with growth across every region,' said Mortgage Choice Chief Executive Officer Anthony Waldron.
In South Australia and the Northern Territory, the average loan size surged 17.8% in the last year. That's equal to adding more than $105,000 onto an average loan of nearly $695,000.
"It's really hard at the moment to find housing, for anyone really," Janine Ashmore, cofounder and director at Darwin-based Bliss Home Loans, told Australian Broker.
She said part of the problem is that interstate developers and investors are snapping up properties, causing home prices to soar. The intense competition has led to unconventional buying habits — including larger mortgages — as people scramble to enter the market.
"People are going in and offering a good $100,000 over the purchase price, just so they can beat the investors," Ashmore said. "But then they're being talked into, by the applicants, to basically have no conditions on the contract: no builder compares and no finance period. And they do this before their pre-approval period comes through. They're panicking to beat everyone else."
Loan sizes in Western Australia and Queensland also grew in the double digits, up 15.2% and 13.9%, respectively, or more than $80,000 added on to an average loan.
“The survey also revealed a stark difference in expectations for how long it will take to save a deposit, with 36% of prospective buyers saying they expect it will take five or more years, and 31% expecting it will take less than two years," Waldron said. "The gap reflects the reality that first-time homebuyers without the financial backing from their family face a fundamentally different journey to homeownership than those who can access parental support.
"Consecutive rate hikes this year have shaken confidence," the CEO added. Half of would-be buyers now say higher interest rates have made them less confident about the market, up from 35% in the previous quarter.
"With each new hike, buyers are having to reassess their property plans, and find new approaches to saving and planning," Waldron said. "However, for those who are already in a position to purchase, the market conditions may work in their favour.”
