interest rates
Interest rates continue to rise. Image – Canva.
  • Borrowers took out significantly smaller loans for the purpose of building houses from July 2021 to the same month this year
  • Average loans for new builds have declined by 28%, according to Joust
  • In Victoria this figure is closer to 40%

Last week, data from the Australian Bureau of Statistics (ABS) revealed that new builds have declined significantly across Australia thanks to increased interest rates, a tight labour market and material shortages.

With the cash rate expected to be rise again today, home loans marketplace Joust has released data revealing borrower trends.

The data has noted that between July 2021 and July 2022, borrowers took out significantly smaller loans for the purpose of building houses.

However, the size of loans accessed for refinancing purposes has been stable, and in New South Wales this increased in average value.

Josut’s Instant Match platform split loans into three categories – Build, Refinance and Buy.

Average loans under the Build category have fallen by 28.05% to $533,634. Loans in Refinance barely changed, with just a 1.26% fall, while the buy category saw a 6.81% decline to $611,250.

“Record low interest rates meant that lenders were seeing interest not only from people looking to get into their first home, but others who could borrow to build their dream homes without having to worry much about the interest they would be paying back,” said Joust CEO Carl Hammerschmidt.

“As our data shows, interest for bigger loans in those categories has dropped off significantly in the last 12 months.

“At the same time, the needle on average loan amounts for the purpose of refinancing has moved very little, and Aussies remain keen to get the best deal. We anticipate the average size of loan in this refinance category to grow in the final quarter of 2022 and into 2023 as many come to the end of their fixed interest rate periods on home loans.”

State by state

Victorian new build loans fell by 39.13% – or from $975,000 to $593,500. NSW recorded a lower decline in the same category, with loans declining by 30.79% from $660,000 to $456,789.

The ACT bucked the trend, with average loan sizes increasing by 15.81%, from $450,000 to $521,167. Meanwhile, NSW saw an uptick in the average loan size, of 13.8%, from $728,216 to $828,693. This was driven by a significant 22.78% rise in the refinance category, as New South Welshmen seek better deals on their new home loans.



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