Mortgage values drop in back-to-back months: ABS

The latest Lending Indicators data released by the Australian Bureau of Statistics (ABS) has revealed a second consecutive drop in the value of new loan commitments for January 2024.

For total housing, the value of new loan commitments fell 3.9 per cent to $25.1 billion (seasonally adjusted), following a 4.1 per cent decline in December 2023. Values still remained 8.5 per cent higher when compared to the same period last year.

Values of new loan commitments for both owner-occupier housing and investor housing fell during the month, by 4.6 per cent to $15.9 billion and 2.6 per cent to $9.2 billion, respectively.

Both remained at higher levels when compared to January 2023, at 3.4 per cent for owner-occupier housing and 18.5 per cent for investor housing.

ABS head of finance statistics Mish Tan stated: “Liaison with lenders suggests that recent improvements to loan processing times increased the number of loans processed in peak periods this year, relative to prior years.

“Although owner-occupier lending has fallen for two months in a row, the growth in trend terms was 1.5 per cent over the year.”

The number of owner-occupier first home buyer loans declined by 6.9 per cent to 8,707, following an 8.9 per cent fall in December, and remained 4.4 per cent higher than a year ago.

Furthermore, the value of first home buyer loans fell by 6 per cent, sitting 13.2 per cent higher than in January 2023. The average loan size for a first home buyer loan increased from $485,000 to $514,000 over the year.

Tan further stated that the number of refinanced owner-occupier home loans has “fallen sharply” since lenders began reducing competitive cashback offers, despite the volume of loans being refinanced comparatively higher than new loans for the first half of 2023.

The number of refinanced owner-occupier home loans between lenders fell 7.6 per cent for the month and 30.8 per cent on the same period last year.

Commonwealth Bank of Australia (CBA) senior economist Belinda Allen stated the January data returned weaker than the major bank (+1.6 per cent) and consensus expected (+2 per cent).

“The monthly numbers can be volatile. Looking at annual growth can help smooth out the swings. On this note investors have been the key driver of new lending over the past year,” Allen said.

ANZ senior economist Adelaide Timbrell noted that the drops in sales volumes in December and January “may signal further weakness” in the lending sphere over the next few months, along with the fall in average loan size for owner-occupiers.

Matthew Hassan, Westpac senior economist, said that while the total value for annual approvals still remains above levels recorded in 2023, the back-to-back drops have “given back about half of the rally that had been seen up to November.

Hassan suggested that the Reserve Bank of Australia’s (RBA) November rate hike and stretched affordability in general appear to be “weighing more heavily on owner-occupier activity”.

“Overall, the update suggests November’s interest rate rise may have had a more material influence on markets. Housing turnover weakened into year end with price growth also softening. Prospects look a little better in early 2024 although gains in finance are likely to remain sluggish,” Hassan said.

[RELATED: New mortgage lending drops for first time in 5 months]

Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.