The number of new investment loans rose 3.5% in the June quarter, while new owner-occupier loans edged up 0.9%, according to Australian Bureau of Statistics (ABS) data.
“June quarter’s overall rise in home loans followed a fall in the March quarter. Through the year growth was more subdued at around 0.2%. That said, lending activity is still at relatively high levels,” said Mish Tan (pictured left), ABS head of finance statistics.
“While there were rate cuts in February and May, we will not see the full impact of these on new home lending activity until later in the year.”
There were 80,929 new owner-occupier loans approved in the June quarter, with a total value of $54.7 billion, up 2.4% ($1.3 billion) from the previous quarter. The average loan size rose $17,804 to a record $678,011, ABS data showed.
“While the number of new owner occupier loans in the June quarter was slightly lower than this time last year, the value of loans rose by 7.4%,” Tan said. “The average loan size has grown by 7.5% since the June quarter 2024. This was consistent with higher property prices, noting growth has been stronger in Queensland, South Australia and Western Australia.”
Loan growth was driven by Queensland (+255 loans), South Australia (+137), Tasmania (+59) and the Northern Territory (+57). Refinances between lenders rose 0.3% (175 loans) to 65,205, 24.1% higher year-on-year.
There were 49,065 new investment loans approved in the June quarter, up 3.5% (1,656 loans) following two consecutive quarterly declines. The total value reached $32.9 billion, up 1.4% ($443 million), with the average loan size rising $1,103 to $674,259.
“The 3.5% quarterly growth in the number of investment loans follows two consecutive quarterly falls,” Tan said. “While annual growth slowed to 0.8% from 27% in the June quarter 2024, the number of new loans remained historically high.”
The largest increases were in the Northern Territory (+21.1%, 96 loans) and Western Australia (+1.4%, 85 loans).
Owner-occupier first-home buyer loans rose 1.7% (492 loans) to 28,861 in the quarter. Gains were recorded in Queensland (+226 loans), New South Wales (+187), Victoria (+88), Tasmania (+80), the Australian Capital Territory (+58) and the Northern Territory (+32).
RBA’s third 0.25 percentage point cut this year lowered the cash rate to 3.60%, boosting borrowing capacity.
Canstar.com.au analysis shows a single person on the average full-time wage could now borrow an additional $12,000.
The big four banks expect further easing:
In seasonally adjusted terms, the total value of new housing loans rose to $87.7 billion in the June quarter. First-home buyers recorded the largest percentage rise (+5.7%), followed by upgraders (+4.4%) and investors (+1.4%).
Sally Tindall (pictured right), Canstar.com.au data insights director, said the August cash rate cut would give existing borrowers more value, with the average owner-occupier variable rate expected to fall to around 5.54%.
“For buyers, however, lower interest rates could tempt them to borrow more from the bank, and that’s not necessarily a good thing,” Tindall said.
“The RBA’s rate cuts are helping push new loan sizes to eye-watering levels. The average new owner-occupier loan is now $678,000 – that’s $18,000 more than it was just three months ago – that’s an increase of $198 a day.
“When the cost of borrowing falls, some buyers use it to bid higher at auction, particularly in sought-after property hotspots. This is exactly what we’re seeing play out in the latest ABS data.
Canstar research shows that a 0.25-percentage-point cut is likely to boost the average person’s maximum borrowing capacity by $12,000, which alone is modest but, over the last three cuts, could amount to an increase of $35,000.
“This third cash rate cut is also likely to encourage more buyers into the market, with further confirmation the days of higher interest rates are now firmly in the rear-view mirror,” Tindall said.
“Any boost in borrowing capacity should be taken with a healthy dose of caution. Just because the bank says you can borrow more money, doesn’t automatically make it a good idea.
“Before you take out a new mortgage, check what your repayments might look like if interest rates rose by 3 percentage points. While this kind of scenario is highly unlikely in the near future, a home loan is for up to three decades and a lot can happen in this time.”
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