The size of the average new owner-occupier mortgage in Australia has hit a record high, as borrowers sign up to bigger debts than ever before.

ABS lending indicator data, released today for the month of May, shows the average new owner-occupier mortgage clocked in at $626,055, the highest level in ABS records.

This is despite the fact the cash rate is at the highest level since November 2011.

The average new loan size for owner-occupiers hit record highs in Queensland, South Australia and Western Australia.

While NSW still leads the way in terms of the largest average new owner-occupier mortgage at $767,584, this remains below the peak recorded in January 2022 of $803,235.

The average new loan size in Victoria fell this month and remains significantly below the peak recorded in January 2022 of $651,364.

Average new owner-occupier loan sizes

	Amount	Monthly change	Change since RBA hikes (Apr 22)
Australia	$626,055 – record high	+$264 +0.04%	+$14,901 +2.4%
NSW	$767,584	+$3,131 +0.4%	-$18,451 -2.3%
VIC	$601,891	-$6,291 -1.0%	-$35,377 -5.6%
QLD	$586,627 – record high	+$3,516 +0.6%	+$59,175 +11.2%
SA	$541,775 – record high	+$3,313 +0.6%	+$74,490 +15.9%
WA	$538,860 – record high	+$947 +0.2%	+$67,371 +14.3%
TAS	$462,324	+$12,842 +2.9%	+$14,546 +3.2%
NT	$437,427	N/A	+$10,915 +2.6%
ACT	$614,242	N/A	+$17,921 +3.0%

Source: ABS Lending Indicators May 2024, released 8 July 2024, original data. Includes construction, new dwellings and existing dwellings but excludes loans for land, alterations and additions.

Difference in monthly repayments on the national average new loan size - April 2022 vs May 2024

For an owner-occupier paying principal and interest with a 30-year loan

	Apr-22	Today	Change
Loan size	$611,154	$626,055	+$14,901
Rate	2.41%	6.27%	+3.86%
Application stress test rate	5.41%	9.27%	+3.86%
Monthly repayments	$2,386	$3,863	+$1,477

Source: RateCity.com.au. Note: rates are as recorded by the RBA, new owner-occupier loan sizes are from the ABS.

RateCity.com.au research director, Sally Tindall, said: “Australia’s Teflon property market continues to rise, dragging the average new loan size along for the ride, despite the rate hikes.”

“Over the last two years, buyers have seen their maximum borrowing capacity plummet, in some cases by hundreds of thousands of dollars, as a result of the RBA hikes, and yet the average new loan size has hit a new record high,” she said.

“It’s astounding to think owner-occupiers are, on average, taking out larger loans than ever before despite the fact the cash rate is sitting at a 12-year high.

“Currently, the average new owner-occupier rate is 6.27 per cent - a difficult benchmark to clear. What’s even more staggering is that these borrowers are passing the banks’ stress tests at an average rate of 9.27 per cent.

“The average new loan size for owner-occupiers hit record highs in the states of Queensland, South Australia and Western Australia, where property prices are now at their peak in their respective capital cities, according to CoreLogic data.

“The average new loan size in NSW, however, is still below the peak recorded in January 2022, despite the fact Sydney property prices have just hit a new record high, as borrowers presumably come to the table with bigger deposits.

“If you’re thinking about taking out a new mortgage, make sure you factor in the possibility of further rate hikes and don’t even entertain the idea of rate cuts when doing these calculations.

“A mortgage is for up to 30 years – that’s a long time to be living off bread and water for someone who’s overstretched the budget at an overheated auction,” she said.

New lending takes a backwards step in May

The value of new home loans dropped in the month of May, with $503 million less in mortgages settled compared to the previous month.

Nevertheless, new lending in May was up 18.0 per cent compared to the same time a year ago and an incredible 29.5 per cent for investors.

Value of new home loans approved in May

	Value	Monthly change	Year-on-year change
TOTAL	$28.80 billion	-$503 million	+$4.40 billion
		-1.7%	18.0%
Owner-occupier	$18.13 billion	-$366 million	+$1.97 billion
		-2.0%	+12.2%
Investor	$10.67 billion	-$137 million	+$2.43 billion
		-1.3%	+29.5%

Source: ABS Lending Indicators May 2024, released 8 July 2024, seasonally adjusted data.

Refinancing activity settles into its new norm

A total of $16.18 billion worth of mortgages were refinanced in the month of May – a slight drop from the previous month.

The value of refinancing is now settling into its new norm, recording values just over $16 billion every month since the start of the year.

Total value of refinancing

May 24	Monthly change	Year-on-year change	Total since start of hikes (May 22 – May 24 incl.)
$16.18 billion	-$113 million -0.7%	-$4.62 billion -22.2%	$460 billion

Source: ABS Lending Indicators May 2024, released 8 July 2024, seasonally adjusted data.

Fixing lifts off rock bottom – but not by much

The proportion of new and refinanced loans opting for a fixed rate was just 1.7 per cent in the month of May. While this is the fourth lowest level in ABS records, it is a slight rise from the record low documented in the previous month of just 1.2 per cent.

Fixed vs variable: proportion of new and refinanced loans

Source: ABS Lending Indicators, original data. Based on the value of new and refinanced loans funded in the month.

 

Australia’s third largest home loan lender, National Australia Bank, has today slashed its 3-year fixed rate by 0.60 percentage points – the first fixed rate change from a big four bank this year.

The bank has cut just the one fixed term and only for owner-occupiers paying principal and interest, in a move designed to appeal to customers worried about the prospect of future cash rate rises.

This takes NAB’s lowest 3-year fixed rate down to a relatively competitive 5.99 per cent for owner-occupiers that own at least 30 per cent of their property (loan-to-value ratio of 70% or less).

NAB: today’s fixed rate change

Rates are for owner-occupiers paying principal & interest

Fixed term	Old rate	New rate	Change
3-yr (30%+ deposit)	6.59%	5.99%	-0.60%
3-yr (less than 30% deposit)	6.64%	6.04%	-0.60%

Source: RateCity.com.au

NAB the only big four bank with a rate in the ‘5’s’

Today’s move means NAB is the only big four bank offering an advertised rate that starts with a ‘5’ (excludes CBA’s Unloan).

The next lowest big four bank fixed rate is from Westpac at 6.49 per cent, fixed for 2-years.

That said, the lowest 3-year fixed rate on the RateCity.com.au database is 0.40 percentage points lower at 5.59 per cent from Community First Bank, Police Bank, Bank of Heritage Isle and Border Bank.

Big four banks: lowest advertised rates

Loan type	CBA	Westpac	NAB	ANZ
1-yr	6.59%	6.59%	6.69%	6.69%
2-yr	6.84%	6.49%	6.59%	6.54%
3-yr	6.59%	6.59%	5.99%	6.59%
4-yr	6.69%	6.59%	6.74%	6.74%
5-yr	6.69%	6.69%	6.79%	6.84%
Lowest var	6.15%*	6.44% for 2-yrs then +0.4% pts	6.79%	6.14%*

Source: RateCity.com.au. Note: rates are for owner-occupiers paying principal and interest. Deposit requirements apply. * rates are for CBA and ANZ’s digital-only home loans.

Lowest fixed rates on the RateCity.com.au database

Fixed term	Advertised rate	Lender
1-yr	5.74%	The Capricornian
2-yr	5.64%	Australian Mutual*
3-yr	5.59%	Community First, Police Bank^
4-yr	5.80%	Up Bank
5-yr	5.59%	RACQ
Variable	5.75%	Abal Bank

Source: RateCity.com.au. Note: rates are for owner-occupiers paying principal and interest. Deposit requirements apply, excludes green loans, lowest variable excludes introductory rates. *first home buyer loan. ^ Police Bank rate is also on offer from Bank of Heritage Isle and Border Bank.

Does this mean now is a good time to fix?

Most lenders’ lowest advertised home loan rates are fixed rates and yet despite this, the proportion of borrowers opting for a fixed rate is at near record lows.

The latest ABS lending indicator figures show just 1.7 per cent of new and refinanced loans in May opted for a fixed rate – the fourth lowest level in ABS records.

This is unsurprising, with borrowers opting to stay on variable rates in anticipation of the cash rate cuts some economists previously predicted would come as early as August.

However, with the RBA now potentially mulling over a cash rate hike due to sluggish inflation figures, a short-term fixed rate is no longer the silliest idea, provided borrowers shop around for a competitive rate and commit to refinancing or renegotiating their loan as soon as their fixed rate expires.

NAB’s own economic team previously predicted the first cash rate cut would come in November of this year, but recently changed its forecast, now predicting the first cut won’t arrive until May 2025.

Proportion of new and refinanced loans opting for a fixed rate: ABS

Source: ABS Lending Indicators, original data. Based on the value of new and refinanced loans funded in the month.

RateCity.com.au research director Sally Tindall said: “This is a strategic move from NAB in a bid to test whether there’s any appetite among borrowers to revert back to fixing.”

“A big bank fixed rate that starts with a ‘5’ is likely to turn at least a few heads, particularly among those worried about the prospect of further cash rate hikes,” she said.

“The popularity of fixed rates peaked back in July 2021 when 46 per cent of new and refinanced loans opted for a fixed rate, according to the ABS. This now sits at just 1.7 per cent in the most recent data.

“It’s hard to see people flocking back to fixed rates, but this rate under 6 per cent from NAB is designed to test this.

“However, fixing for three years is a big financial commitment at any time, but particularly when the future of the cash rate remains highly uncertain.

“Governor Bullock has said the cash rate is in ‘restrictive territory’, which means it’s likely to come down at some point, however, not even the RBA knows exactly when that will be, by how much, and whether we’re likely to see more hikes before then.

“For those looking for some relief from having to follow the RBA’s every thought, a fixed rate could be the certainty they need, even if they end up having to pay more for that peace of mind.

“For those looking to pay the least amount of interest possible, it could end up being a gamble between a highly competitive variable rate and a short term fixed one.

“The RateCity.com.au database shows the lowest 1-year fixed rate is sitting at 5.74 per cent, while the lowest variable is just 0.01 percentage point higher at 5.75 per cent.

“Right now, there’s barely a crack of light between the two rates, but a couple of cash rate changes either way would change this equation entirely.

“Borrowers considering a fixed rate should know these loans are a lot less flexible, with caps on extra repayments and typically no access to an offset account.

“Short-term fixed rates can also be a lot more work as you’ll need to renegotiate your loan, or potentially refinance at the end of the fixed rate period.

“The last thing you want to do is roll over onto a highly uncompetitive variable rate after the fixed rate term expires,” she said.

Are flights and travel back on your agenda this year? A trip to Europe or the USA calling your name? You may be able to get bonus reward points to redeem for travel by signing up for credit card deals.

In July 2024, there are a variety of providers offering credit cards with Qantas frequent flyer points bonuses on sign up, ranging from 100,000 points all the way up to 150,000 points.

The bonus Qantas frequent flyer points available this month could take you not only around Australia, but to international destinations, such as Hawaii or Europe.

Some of the best frequent flyer credit cards, offering the highest sign-up frequent flyer points, in the RateCity Database for July 2024 

Where could your Qantas frequent flyer points take you?

At the time of writing, the current cost for a return plane ticket domestically or internationally from Sydney, in terms of frequent flyer points, were as follows: 

Source: Qantas frequent flyer points calculator. Note: Total points required for return trips travelling in economy class when searching on 10/07/2024. Based on travel to a major airport in the capital city (e.g. Heathrow in London) from Sydney, Australia. Actual points cost at time of booking may vary. 

What are the risks of points chasing with credit cards?

Points chasing or points hacking is where you can use your credit card to help offset some airfare expenses. By applying for credit cards with generous sign-up bonus point offers, you could spend these points on plane tickets, rather than using your own savings. 

But before you apply for a credit card to score those bonus points, consider checking the eligibility criteria. To access the bonus rewards, you may need to earn more than a minimum income threshold, and spend a minimum amount of money on eligible purchases during the card’s introductory period. 

Before signing up, look at your financial situation and the card’s terms and conditions so you know you can confidently meet any necessary requirements, without being pressured to spend more than you can afford. If your application for one of these credit cards is rejected, it may negatively affect your credit history and lower your credit score.

Points hacking strategies tend to better suit those who can comfortably afford to pay off their credit card balance in full each statement period. If you struggle with paying off your credit card, or tend to overspend, a rewards card may not always be the best fit for your lifestyle or budget. 

There's more to a credit card than its reward points, and your financial well-being should always come first. It's important to compare a range of factors like interest rates, fees, and perks like complimentary travel insurance, before signing on the dotted line.

If the Reserve Bank of Australia (RBA) considers hiking the cash rate before the end of the year, how could your personal loans be affected? When your personal financial situation is changing, it’s important to carefully compare personal loans to choose an option that better matches your needs.

The latest Lending Indicators from the Australian Bureau of Statistics (ABS) show that the value of new loan commitments for total fixed term personal finance fell 0.7% to $2.6 billion in May 2024, but was 12.7% higher compared to a year ago. This follows a 0.9% rise in April 2024.

Many Australian households may be under the financial pump, with the Sydney Morning Herald reporting that the National Debt Helpline has been fielding an increasing number of calls from debt-stressed Australians since the start of the rate hikes in 2022. 

This situation could be exacerbated if inflation remains stubbornly high, as this could lead the RBA to hike the national cash rate for the 14th time since May 2022. This could increase the cost of loan repayments for the nation’s borrowers, including mortgage holders, potentially putting more households under financial stress. That said, economists from some leading banks are still forecasting that the RBA’s next move will be a cut, though it may take place later in 2025 than previously predicted.

In some cases, a personal loan may be able to help a household manage financial stress, such as when used to help consolidate other debts. But it’s essential to carefully calculate your costs, compare your choices and consider your options before proceeding, to help minimise the risk that you could end up in a worse financial position from where you started.

Looking at the Real Time Ratings™ for various personal loans can help you get a better idea of their overall value. Each star rating combines the loan’s cost and flexibility, and is frequently updated to help ensure improved accuracy. The top-rated personal loans in different categories on the RateCity Personal Loan Leaderboards may also become eligible for the RateCity Gold Awards.

(Rankings are correct at the time of publishing. Please note lenders may trade places on the list as interest rates and fees change and RateCity’s tracker reflects these movements.)
 

Australia’s total credit card debt attracting interest charges has dropped for the first time in six months, as households finally start to reign in their burgeoning credit card debts.

The latest RBA credit card statistics, released for the month of May, shows Australia’s total credit card bill attracting interest charges is now $17.61 billion – a drop of $83.9 million from the previous month.

While the country’s total credit card debt is still way too high, the drop is likely to be the first inroads many families have made this year into reducing this toxic debt.

RateCity.com.au research shows that in the month of May alone, Australians collectively were charged $275 million in credit card interest from lenders.

RBA: credit card debt attracting interest charges (excludes commercial cards)

Amount owing - May 2024	Monthly change	Year-on-year change
$17.61 billion	-$83.9 million -0.5%	-$158.7 million -0.9%

Source: RBA, released 8 July 2024, original data, excludes commercial cards.

Average credit card interest rate hits record high

The average credit card interest rate of those balances attracting interest charges hit a new record high in May 2024 of 18.39 per cent, according to the latest RBA data.

Average rate of credit card balances incurring interest: RBA

Source: RBA

This broken record comes as no surprise. RateCity.com.au research shows all four big banks have increased the interest rates on select credit cards since August of last year.

• 25 August 23: CBA hikes the rate on its Low Fee card by 0.75% pts.
• 7 September 23: ANZ increases the rate on all credit cards, in one case by up to 1.25% pts.
• 1 November 23: CBA raises the rates on select credit cards by up to 1.25% pts.
• 13 February 24: NAB hikes select credit card interest rates by 1.00% pts.
• 22 February 24: ANZ hikes the rates on select cards again, this time by 0.50% pts.
• 20 June 224: Westpac hikes interest rates on its rewards and low fee cards by up to 1.25% pts.

Credit card accounts continue to rise

After a drop in April, the number of credit card accounts rose again in May – the 19^th time in the last 20 months.

Number of credit card accounts: May 2024 (commercial cards excluded)

Amount	Monthly change	Year-on-year change
12.68 million	+3,867 +0.03%	+105,480 + 0.8%

Source: RBA, released 8 July 2024, original data, excludes commercial cards.

RateCity.com.au research director, Sally Tindall, said: “Today’s RBA data is a glimmer of hope that the battle against rising credit card debt can be won, even amidst an inflation crisis.”

“After watching credit card debt tick up for five months in a row, it’s fantastic to see the needle finally move in the right direction,” she said.

“The latest RBA data shows borrowers with credit card debt are now paying an average rate of 18.39 per cent – the highest in the central bank’s records.

“Credit card interest rates don’t typically rise and fall in lock step with the cash rate, but over the last year we’ve seen not just one, but all four big banks quietly raise the interest rates on select cards.

“If you’ve got credit card debt, take action by making sure you’re on the lowest interest rate possible and make a plan that puts a priority on paying back this debt in full.

“Tax time is the perfect opportunity to take an axe to your credit card balance, for those expecting money back on their return.

“The start of the stage three tax cuts and the energy bill rebate will also help inject space into household budgets, giving those with credit card debt the chance to make even greater inroads.

“Credit card debt is toxic, the sooner you can eradicate it from your budget, the better off you’re likely to be financially,” she said.

Credit cards under 10% on RateCity.com.au

Note: excludes 0% cards that charge fees instead

Card	Rate	Annual fee
G&C Mutual Low Rate Visa	7.49%	$50
Community First Low Rate card	8.99%	$40
Move Bank Low Rate card	8.99%	$0 for first 12 mths then $59
Defence Bank Foundation Visa	8.99%	$45
Easy Street Financial Easy Low Rate	8.99%	$40
Bank First Visa Platinum	9.59%	$99
Australian Unity Low Rate Visa	9.90%	$59
Westpac Lite card	9.90%	$108
Greater Bank Visa credit card	9.95%	$49
Bendigo Bank Bright card	9.99%	$59
Coastline Visa	9.99%	$0
Bank of us Visa Credit	9.99%	$39

Source: RateCity.com.au

 

The size of the average new owner-occupier mortgage in Australia has hit a record high, as borrowers sign up to bigger debts than ever before.

ABS lending indicator data, released today for the month of May, shows the average new owner-occupier mortgage clocked in at $626,055, the highest level in ABS records.

This is despite the fact the cash rate is at the highest level since November 2011.

The average new loan size for owner-occupiers hit record highs in Queensland, South Australia and Western Australia.

While NSW still leads the way in terms of the largest average new owner-occupier mortgage at $767,584, this remains below the peak recorded in January 2022 of $803,235.

The average new loan size in Victoria fell this month and remains significantly below the peak recorded in January 2022 of $651,364.

Average new owner-occupier loan sizes

	Amount	Monthly change	Change since RBA hikes (Apr 22)
Australia	$626,055 – record high	+$264 +0.04%	+$14,901 +2.4%
NSW	$767,584	+$3,131 +0.4%	-$18,451 -2.3%
VIC	$601,891	-$6,291 -1.0%	-$35,377 -5.6%
QLD	$586,627 – record high	+$3,516 +0.6%	+$59,175 +11.2%
SA	$541,775 – record high	+$3,313 +0.6%	+$74,490 +15.9%
WA	$538,860 – record high	+$947 +0.2%	+$67,371 +14.3%
TAS	$462,324	+$12,842 +2.9%	+$14,546 +3.2%
NT	$437,427	N/A	+$10,915 +2.6%
ACT	$614,242	N/A	+$17,921 +3.0%

Source: ABS Lending Indicators May 2024, released 8 July 2024, original data. Includes construction, new dwellings and existing dwellings but excludes loans for land, alterations and additions.

Difference in monthly repayments on the national average new loan size - April 2022 vs May 2024

For an owner-occupier paying principal and interest with a 30-year loan

	Apr-22	Today	Change
Loan size	$611,154	$626,055	+$14,901
Rate	2.41%	6.27%	+3.86%
Application stress test rate	5.41%	9.27%	+3.86%
Monthly repayments	$2,386	$3,863	+$1,477

Source: RateCity.com.au. Note: rates are as recorded by the RBA, new owner-occupier loan sizes are from the ABS.

RateCity.com.au research director, Sally Tindall, said: “Australia’s Teflon property market continues to rise, dragging the average new loan size along for the ride, despite the rate hikes.”

“Over the last two years, buyers have seen their maximum borrowing capacity plummet, in some cases by hundreds of thousands of dollars, as a result of the RBA hikes, and yet the average new loan size has hit a new record high,” she said.

“It’s astounding to think owner-occupiers are, on average, taking out larger loans than ever before despite the fact the cash rate is sitting at a 12-year high.

“Currently, the average new owner-occupier rate is 6.27 per cent - a difficult benchmark to clear. What’s even more staggering is that these borrowers are passing the banks’ stress tests at an average rate of 9.27 per cent.

“The average new loan size for owner-occupiers hit record highs in the states of Queensland, South Australia and Western Australia, where property prices are now at their peak in their respective capital cities, according to CoreLogic data.

“The average new loan size in NSW, however, is still below the peak recorded in January 2022, despite the fact Sydney property prices have just hit a new record high, as borrowers presumably come to the table with bigger deposits.

“If you’re thinking about taking out a new mortgage, make sure you factor in the possibility of further rate hikes and don’t even entertain the idea of rate cuts when doing these calculations.

“A mortgage is for up to 30 years – that’s a long time to be living off bread and water for someone who’s overstretched the budget at an overheated auction,” she said.

New lending takes a backwards step in May

The value of new home loans dropped in the month of May, with $503 million less in mortgages settled compared to the previous month.

Nevertheless, new lending in May was up 18.0 per cent compared to the same time a year ago and an incredible 29.5 per cent for investors.

Value of new home loans approved in May

	Value	Monthly change	Year-on-year change
TOTAL	$28.80 billion	-$503 million	+$4.40 billion
		-1.7%	18.0%
Owner-occupier	$18.13 billion	-$366 million	+$1.97 billion
		-2.0%	+12.2%
Investor	$10.67 billion	-$137 million	+$2.43 billion
		-1.3%	+29.5%

Source: ABS Lending Indicators May 2024, released 8 July 2024, seasonally adjusted data.

Refinancing activity settles into its new norm

A total of $16.18 billion worth of mortgages were refinanced in the month of May – a slight drop from the previous month.

The value of refinancing is now settling into its new norm, recording values just over $16 billion every month since the start of the year.

Total value of refinancing

May 24	Monthly change	Year-on-year change	Total since start of hikes (May 22 – May 24 incl.)
$16.18 billion	-$113 million -0.7%	-$4.62 billion -22.2%	$460 billion

Source: ABS Lending Indicators May 2024, released 8 July 2024, seasonally adjusted data.

Fixing lifts off rock bottom – but not by much

The proportion of new and refinanced loans opting for a fixed rate was just 1.7 per cent in the month of May. While this is the fourth lowest level in ABS records, it is a slight rise from the record low documented in the previous month of just 1.2 per cent.

Fixed vs variable: proportion of new and refinanced loans

Source: ABS Lending Indicators, original data. Based on the value of new and refinanced loans funded in the month.