Lending indicator data released Friday by the ABS revealed the value of new home loan commitments fell 2.7% to $25.8 billion in October. 

This was led by the value of owner occupier loans falling 2.9% to $17.2 billion, and investor loans declining by 2.2%.

Despite these declines, refinancing remained at record highs in October according to ABS’ Head of Finance and Wealth Katherine Keenan.

“Monthly owner-occupier refinancing between lenders has remained above $12 billion since June 2022, well above pre-pandemic values,” Ms Keenan said.

“Investor refinancing activity has also remained high.

"The RBA cash rate increased 225 basis points between June and October 2022, which coincided with a greater number of borrowers seeking loans with lower interest rates from competing lenders.”

At the national level, the average loan size for owner-occupier dwellings (which includes construction and the purchase of new and existing dwellings rose $7,000 to $595,000.

This comes as property prices recorded their seventh consecutive decline (1.0%) in November, according to CoreLogic’s Home Price Index.

AMP Chief Economist Shane Oliver expects average property prices to fall further into the second half of 2023 as rate hikes continue to flow through and economic conditions deteriorate.

“Rising mortgage rates are the main driver of the slump and there is likely more to go,” Mr Oliver said.

“Since April a buyer on average full-time earnings with a 20% deposit has seen a 25% decline in their home buying power.

“We continue to expect a 15-20% top to bottom fall in home prices out to the September quarter next year, followed by a gradual recovery.”

Read More: Will property prices really fall by 20% in 2023?

First home buyers steer clear of purchasing property

In October 2022, the number of new loan commitments for first home buyers fell 3.2% to 8,576.

The decrease shows the number of first home buyers entering the market is 47% below the January 2021 peak of 16,187.

State by state, the number of first home buyers in October fell by:

  • Queensland -1.3%
  • Victoria -4.1%
  • New South Wales -1.7%
  • South Australia -1.9%
  • Tasmania fell -14.6%
  • Northern Territory -8.1%
  • ACT fell -2.3%
  • Western Australia showed no change

Building approvals yet to feel impact of rate rises

Lending for the construction or purchase of new homes fell 0.9% in October, its lowest level in more than three years.

On Wednesday the ABS also released building approvals data, which showed a 6.0% fall in October - new private sector dwellings led the fall, down 11.3%.

Housing Industry Association (HIA) Economist Tom Devitt said the worst is not over for the construction industry as the RBA rate hikes are yet to make their mark. 

“Building approvals fell by 6.0% in the month of October to be 9.0% lower than in the three months to October compared to the same quarter in 2021,” Mr Devitt said. 

“Building approvals have been sustained in recent months by the record number of home sales prior to the first increase in the cash rate that still haven’t been approved, much less commenced construction.

“The full impact of the rate rise will not be observed in approvals data until 2023 when the pool of earlier sales is exhausted.”

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LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
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Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

Important Information and Comparison Rate Warning

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