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Average new loan size hits record high despite rate hikes

Sally Tindall avatar
Sally Tindall
- 5 min read
Average new loan size hits record high despite rate hikes

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

AmountMonthly changeChange 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$437,427N/A+$10,915
+2.6%
ACT$614,242N/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-22TodayChange
Loan size$611,154$626,055+$14,901
Rate2.41%6.27%+3.86%
Application stress test rate5.41%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

ValueMonthly changeYear-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 24Monthly changeYear-on-year changeTotal 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

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.

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Product database updated 14 Jul, 2024

This article was reviewed by External Comms Lead Eden Radford before it was published as part of RateCity's Fact Check process.