The landscape of the housing lending market looks to be shifting, with new lending continuing to rise according to the latest figures from the Australian Bureau of Statistics (ABS) and the Australian Prudential Regulation Authority (APRA). According to recent insights from the housing lending market, lending for mortgages shot to record highs in April 2021.
The full picture is less clear though, with higher risk mortgages stagnating and first-time home buyers sharply dropping off, it appears as though the buyer profiles of properties are changing to accommodate alternative types of secured finance.
Record high lending
With that said, there have been recorded highs in terms of lending for property purchases. Around $31 billion was offered as loans to help buyers purchase properties, which is up from $30 billion the previous month.
Difficulties for first home buyer lending
These new figures from APRA and ABS point to a dramatic increase in the value of finance made available, up almost 15% in the first three months leading up to April when compared to the prior three months. The biggest taker in all of this was the investors, as well as home buyers with more than one property.
Owner-occupiers who had previously purchased property took the lion’s share of this financing, around 52.5%, while 21.5% of total lending in April went to first-time buyers. For FTB, lending has been on a steady decline since December 2021, however, sits above the decade average of 15.7%.
Lenders favour experienced home buyers and investors
It seems as though individuals with experience in purchasing properties are coming out on top at the moment, perhaps as a result of their ability to handle the rising values of properties. This highlights a serious change in the market, affecting first-time property buyers negatively and massively benefiting non-first-time buyers and investors. With the price of a home rising over 10% in the past year alone, the market is becoming increasingly tougher on first-timers.
Another key component of why first-time home buyers are struggling, is the rollback of government assistance programs, with the HomeBuilder scheme wrapping up in March 2021, tying up neatly with the recent statistics published by ABS and APRA.
It seems that although lending for property purchases is on the rise, the buyer profile is shifting towards experienced buyers and investors. As there is an increase in high-risk lending at the moment, it doesn’t seem likely that there will be any drastic shake-ups with mortgage lending any time soon. Aside from the signs of harsher lending standards for home buyers, it will take careful planning to properly roll out any changes to lending due to the current state of the market and rising property values.
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