Value of new home loan commitments fall as interest rates rise

The value of new home loan commitments fell 3.4 per cent to $27.4bn in August, new data has revealed.

It comes after a fall of 8.5 per cent in July, according to the Australian Bureau of Statistics.

“The value of new owner-occupier loan commitments fell 2.7 per cent in August 2022, and the value of new investor loan commitments fell 4.8 per cent,” ABS head of finance and wealth Katherine Keenan said.

“Although lending continued to fall from the high levels of June 2022, the value of loan commitments in August remained elevated compared to pre-pandemic levels.

“Owner-occupier loans in August were 36 per cent higher than for February 2020, while investor loans were 70 per cent higher.”

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Housing loan commitments fell 3.4 per cent in August. ABS Credit: Supplied

New loans to owner-occupier first home buyers rose 10.4 per cent in August to 9258 – the largest rise since August 2020.

However, this was still far below the January 2021 high of 16,330.

There was increased demand across most of the country, especially in Victoria (up 11.9 per cent), Queensland (up 14.3 per cent) and Western Australia (up 13.9 per cent).

“Anecdotal feedback attributed some of the August owner-occupier first homebuyer increased demand to the 2022-23 first home guarantee,” Ms Keenan said.

The value of borrower refinancing of owner-occupier housing loans between lenders rose 2.8 per cent in August to a new record high of $12.8bn.

The average loan size for owner-occupier dwellings fell from $609,000 to $589,000 – but that is still 23 per cent higher than for February 2020.

news, australia, business, banking, economy, politics, federal politics, finance, nsw news, qld news, sa news, tas news, vic news, wa news, value of new home loan commitments fall as interest rates rise

The number of new loan commitments to owner-occupier first home buyers rose 10.4 per cent in August to 9258. NCA Newswire Credit: NCA NewsWire

Meanwhile, apartments have driven the August rise in building approvals.

The total number of dwellings approved rose 28.1 per cent, following an 18.2 per cent decrease in July.

“Approvals for private sector dwellings, excluding houses, rose 99.1 per cent in August, with a sharp bounce back in apartment approvals driving the result,” ABS’ head of construction statistics, Daniel Rossi, said.

“The strong upward movement in August follows a weak July result, which had the lowest number of other residential dwellings approved since January 2012.

“Approvals for private sector houses rose 4.1 per cent in August, following an 0.8 per cent increase in July.”


Data for approvals for private sector houses was more varied, with NSW (12.7 per cent), WA (8.9 per cent) and Victoria (1.2 per cent) increasing, but South Australia (-4.5 per cent) and Queensland (-0.1 per cent) falling.

news, australia, business, banking, economy, politics, federal politics, finance, nsw news, qld news, sa news, tas news, vic news, wa news, value of new home loan commitments fall as interest rates rise

Dwelling units approved, by building type, seasonally adjusted. ABS Credit: Supplied

The value of total building approvals rose 23.5 per cent, following a 14.8 per cent decrease in July.

Total residential building values was up 28.5 per cent – 32.6 per cent in new residential buildings, and 5.4 per cent in alterations.

Non-residential building values rose 15.1 per cent, after dropping 21.5 per cent in July.

The ABS data comes as the Reserve Bank of Australia announced on Tuesday that it was increasing the cash rate target by 25 basis points to 2.60 per cent.

It also increased the interest rate on exchange settlement balances by 25 basis points to 2.50 per cent.

Governor Philip Lowe said this was a necessary move to bring inflation down and the board expected to increase interest rates further over the coming months.

“It is closely monitoring the global economy, household spending, and wage and price-setting behaviour,” he said in a statement.

“The size and timing of future interest rate increases will continue to be determined by the incoming data and the board’s assessment of the outlook for inflation and the labour market.”

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