Investor surge pushes Australian housing loans to two-year high
Investor surge pushes Australian housing loans to two-year high Australia’s housing market continued its upward trend in August 2024, reaching the highest level of new lending since May 2022. According to the latest data from the Australian Bureau of Statistics (ABS), the total value of new housing loans increased by 1.0% to $30.4 billion, with investor activity leading the charge. Canstar’s analysis of the ABS data showed that investor loans saw a significant boost, rising 1.4% in August to $11.71 billion – a 34.2% increase from the same period last year. This surge in investor lending marked the second-highest monthly value on record. Loans to owner-occupiers also grew, increasing by 0.7% to $18.7 billion, reflecting a 16.5% rise year-on-year. However, first-home buyers faced a slight dip, with loans for this group dropping by 1.5% from July to August. Despite the monthly decline, first-home buyer activity was still 9.2% higher than in August 2023. Tindall pointed out that while first-home buyers remain active, they face stiff competition from investors who can use rental income to offset the burden of higher mortgage payments. Breaking down the data by state, Queensland emerged as a key driver of the national rise. Housing loan commitments in the state soared by 40% over the past year, adding $2 billion in value, more than any other state. In contrast, the average national loan size for owner-occupiers dropped by 1% in August, falling to $636,208. Although most states saw decreases, Queensland and Tasmania bucked the trend, with Queensland posting a record high loan size of $603,988. Learn more about: Australia’s housing market
Fixed rates drop amidst predictions
Fixed rates drop amidst predictions Variable and fixed home loan rates saw both increases and cuts this week, with fixed rates outperforming variable, and a potential cash rate cut anticipated by February, Canstar reported. Home loan rate changes Aussie Home Loans raised interest rates on two variable owner-occupier and investor loans by 0.05%, while five other lenders reduced rates across 50 variable loans for both owner-occupiers and investors. Meanwhile, twelve lenders slashed fixed rates on 322 loans, with an average decrease of 0.24%. Fixed rates outperform variable options Abal Banking continues to offer the lowest variable rate at 5.75%, although a surge in rate cuts means that 112 fixed rates now sit below this, a significant increase from last week’s 64. “There was yet another downpour of fixed rate cuts this week,” said Sally Tindall (pictured above), Canstar’s data insights director. Major institutions like Bendigo Bank and Teachers Mutual Group are among those offering reduced rates. Read Full Article here at: Broker News
Advice for Young First Home Buyers
Unsurprisingly, one of the biggest hurdles for young people getting a mortgage is affordability. Melisa Sloan, founder of Madison Sloan Lawyers and author of Big Moments said that high demand and property shortages make things even tougher. “The biggest hurdle is affordability and obtaining finance in an environment where property prices, particularly in city areas are relatively high. Saving for a deposit and the ability to service a mortgage has increasingly become difficult for young people over the past two years, with many now reliant on parental or other family help to obtain a mortgage and get into the property market,” said Sloan. “Many people with good jobs and the ability to service a loan find themselves unable to obtain a mortgage because they do not have a sufficient deposit that is required by lenders. Additionally, property shortages continue to make it difficult for people for young people to get a mortgage.” You may read the whole article here:https://bit.ly/4d1mYQg
New Properties for Sale Up 1.3% – PopTrack
New listings in the housing market have increased year-on-year despite a seasonal slowdown, according to the latest PropTrack Listings Report. Compared to the previous month, June 2024 saw new listing volumes down 15%, marking the transition into a quieter season. Every capital city and regional area reported a monthly decrease in new listings in June. However, new listings were 1.3% higher compared to June 2023. Among capital cities, only Perth (-5.7%), Darwin (-6.7%), and Canberra (-2.6%) saw a year-on-year decline in new listings. In regional markets, only South Australia (+8.2%) experienced an increase in new listings over the year. You may read the whole article here:https://bit.ly/4bIZ8rt
Consumer Spending Up Over the Year
According to NAB’s transaction data, consumer spending has remained steady, with total spending on both goods and services flat. Despite this, discretionary spending saw a modest increase of 0.6% month-on-month, while non-discretionary spending declined by 1%. The decrease in non-discretionary spending was primarily due to a significant drop in expenditure on utilities and fuel. Annual growth in consumer spendingConsumer spending is up 5.6% over the past 12 months. However, consumption growth has softened since the beginning of this year, according to Alan Oster, group chief economist at NAB. You may read the whole article here:https://bit.ly/3zPcrcq
ANZ Predicts Possible RBA Rate Hike in August
Despite speculation that the Reserve Bank of Australia (RBA) might raise the official cash rate at its August meeting, ANZ has forecasted that rates will remain unchanged until February 2025, when it predicts a rate cut. The bank noted that while the Reserve Bank kept the cash rate on hold at 4.35% at its June meeting, the post-meeting statement was slightly more hawkish, with the RBA board stating that they are willing to “do what is necessary” to return inflation to target and will remain vigilant to upside risks in inflation. “Following the stronger than expected monthly inflation print for May, there has been some talk about the possibility of a hike at the RBA’s August meeting,” ANZ said in its report, authored by economists Sophia Angala, Madeline Dunk and Catherine Birch. You may read the whole article here:https://bit.ly/3zD0o29
Consumers Fear Rate Hike Impact
An unexpected drop in confidence saw consumer expectations for variable mortgage rates jump 12.8 per cent in July. According to the Westpac-Melbourne Institute’s Mortgage Rate Expectations Index, this is “the steepest monthly rise since we began running this question in every survey at the start of 2022.” The historical average figure of the index is 143.8. In the last three months, however, there has been a 30 per cent surge, with a below-average read of 122.8 in April to 159.2 in July. What is being dubbed a “sudden hawkish turn” is reportedly the most abrupt change seen in the last seven years. Currently, just under 60 per cent of consumers are expecting a mortgage rate rise over the next year. You may read the whole article here:https://bit.ly/3W0gzhj
Bendigo Bank: RBA Cash Rate to Stay Unchanged All Year
Resolve Finance has announced that the 2024 financial year was a record year for the business, with loan volumes surpassing $1.74 billion. This represents a substantial 11% year-on-year increase for the broker franchise, highlighting its continued growth, and success of the franchise business in the highly competitive mortgage broking industry. It comes after a bumper 2023 for the broker network. A significant portion of this growth can be attributed to strong first-time buyer activity. The number of First Home Buyer schemes and grants Resolve brokers have assisted with has increased by 29% from FY23 to FY24. You may read the whole article here:https://bit.ly/4eT0anx
Population Surge Intensifies Housing Shortages
Australia’s national shortage of dwellings has become more critical due to record population growth, according to Hotspotting. In 2023, the country’s population increased by 651,000, the highest in history, with 84% of that growth attributed to overseas migration. “The record level of population growth last year did not cause the shortage of dwellings, including the under-supply of rental homes,” said Terry Ryder director at Hotspotting. You may read the whole article here:https://bit.ly/4bvSa9f
Australian Household Spending up Slightly
Household spending in Australia rose 0.1% over the past year, according to figures recently released by the Australian Bureau of Statistics (ABS). Spending on services increased by 2.3%, driven by higher expenditures on health and other services, while spending on goods fell 2.5%, led by declines in clothing, footwear, and goods for recreation and culture. Non-discretionary spending rose 1.8%, with significant contributions from health expenses and vehicle purchase and operation costs. Discretionary spending decreased by 1.9%, primarily due to reduced spending on clothing, footwear, and accommodation services. You may read the whole article here:https://bit.ly/4cxUJJ0
