Key indicators show the value of new housing lending fell in December

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New ABS lending data shows the value of new lending fell for the first time in five months

The value of new housing lending fell in December, reversing the trend of recent growth in prior months, according to the latest ABS Lending Indicators data released today.

A total of $26.27 billion in new home and investment property loans were taken out in December, down by 4.1% from November. This is the first fall in five months.

Breaking this down, it was owner occupied borrowers who saw the greatest fall with the value of new loan commitments dropping by 5.6% over the month, down to $16.77 billion in December. This too broke the trend following four consecutive months of growth.

Lending to investors over the same period fell by 1.3% down to $9.50 billion, which was the first fall in ten months. The value of loans to first home buyers broke a four-month trend and was down for the first time since July by 5.5% over the month to $4.87 billion in December.

Canstar’s lending expert, Steve Mickenbecker says, “The last few months’ promising recovery in new lending has proven to be a false dawn, with lending down 4.1 percent for the month in December.”

“Lending to owner occupiers has been the major drag on the market, down by 5.6 percent for the month and now only up by 7.4 percent from a pessimistic interest rate outlook in December 2022.

“Even last month’s star performing investment lending was down, but by a relatively modest 1.3 percent for the month, leaving it still a healthy 20.4 percent above December 2022. Investment recovery looks to be sustainable on the back of the 2023 recovery of house prices and investors’ expectation of future price appreciation.

“Housing prices reported by CoreLogic show a strong recovery over 2023, to the point where Brisbane, Perth and Adelaide are at 2021 highs. But the softening over the past couple of months in the biggest markets in Melbourne and Sydney suggests that demand is off in spite of rental and immigration pressures.

“The decline in inflation for the December quarter should lift the lending market this year, boosting buyer confidence that they no longer have to anticipate a further rate increase and just have to show a little patience for a rate cut later in the year.”

The value of existing loans refinanced to a new lender in December fell by 1.6% when compared to November, which coincided with the most recent Reserve Bank cash rate rise. A total of $17.13 billion in loans were switched to a new lender at the end of the year, which is a far cry from the $21.5 billion at the peak in July 2023.

Canstar’s analysis shows the 4.25 percentage point increase in the cash rate since April 2022 adds approximately $1,562 to repayments on a $600,000 loan over 30 years or $2,603 on a $1 million loan.

Once the November rate increase flows through to borrowers’ repayments in the coming months, we could see another uptick in refinancing activity.

Mickenbecker says, “Fewer existing borrowers were seeking out a better deal in December despite the Melbourne Cup rate rise still fresh in their minds.”

“It can take around three months for rate rises to flow through to repayments, and when November’s hike does hit it will hopefully encourage borrowers to pick up the phone to their lender to negotiate a better rate or make the switch to a new lender.

“The impetus for mortgage holders should be to look for a repayment cut now and not wait around for the Reserve Bank to make its call on rate cuts.”

Summary of the ABS Lending Indicators data for December 2023:

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ABS Lending Indicators
	Dec-22	Nov-23	Dec-23	Difference		% Change
	Dec-22	Nov-23	Dec-23	MoM	YoY	MoM	YoY
Value of new housing commitments
Total Housing	$23.51 billion	$27.39 billion	$26.27 billion	-$1.12 billion	$2.76 billion	-4.1%	11.7%
Owner Occupied	$15.62 billion	$17.77 billion	$16.77 billion	-$998.9 million	$1.15 billion	-5.6%	7.4%
Investment	$7.89 billion	$9.62 billion	$9.50 billion	-$121.9 million	$1.61 billion	-1.3%	20.4%
Value of refinancing to a new lender
Total	$19.48 billion	$17.40 billion	$17.13 billion	-$272.0 million	-$2.35 billion	-1.6%	-12.1%
Owner Occupied	$13.25 billion	$11.50 billion	$11.34 billion	-$159.2 million	-$1.91 billion	-1.4%	-14.4%
Investment	$6.23 billion	$5.90 billion	$5.79 billion	-$112.8 million	-$438.3 million	-1.9%	-7.0%
Value and number of new lending for owner occupier first home buyers
Value	$4.03 billion	$5.15 billion	$4.87 billion	-$281.8 million	$844.3 million	-5.5%	21.0%
Number	8,405	10,363	9,491	-872	1,086	-8.4%	12.9%

Source: www.canstar.com.au. Based on ABS Lending Indicators, seasonally adjusted figures unless otherwise indicated.

If you’re thinking about borrowing you can compare home loans from over 80 lenders with Canstar.

Cover image source: David Gyung/Shutterstock.com

This article was reviewed by our Senior Finance Journalist Alasdair Duncan before it was updated, as part of our fact-checking process.

Belinda Williamson

Group Manager, Corporate Affairs

Belinda is Canstar’s Group Manager, Corporate Affairs with responsibility for the company’s external communications strategy and media relations. A finance enthusiast who has worked in the financial services industry for more than a decade, Belinda is an experienced writer and media spokesperson who regularly contributes to the conversation on the finance topics that matter today through appearances on television and radio and in a multitude of print and online media articles. Belinda was previously Head of Corporate Affairs and company spokesperson at one of Australia’s largest and publicly-listed franchised mortgage brokers where she was responsible for the company’s internal, corporate, media, industry, government and investor communications. She has also worked in North America leading media relations strategies, influencer marketing campaigns and large-scale event projects for some of Canada’s most well-known tech, finance and real estate brands.