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.

You May Also Like

Melbourne property market sees mom and dad builders flock to outer suburbs for the best bang for buck

The cost of building a house in these top 20 suburbs started at $272,944 and topped out at $387,688.

Australian rental market clocks in a near-40% price growth, while wages struggle to keep up

Rents soared by almost 40% across the pandemic, while wages barely clocked in 20% growth.

Gender gap closes? Women outpace men in overall property ownership

Challenges persist for younger women in achieving homeownership, highlighting the need for targeted solutions.

Exclusive: Top five regional New South Wales housing markets revealed, the affordable alternatives to Sydney

Hotspotting has exclusively revealed to TPT New South Wales housing market’s five best regional hotspots for homebuyers and investors.

Top Articles

PropertyGuru Asia Property Awards (Australia) returns for its 7th edition, including several brand new award ...

This year's awards include several brand new categories, with entries closing 2 August 2024.

Housing crisis survival guide: How to buy your first Australian property

Three property experts give the low down on how to nab a home in this tough housing market.

Strata properties as investments: All you need to know about investing in a Perth unit

As the cost of renting approaches the cost of a mortgage, more people are investing in units to escape the rental trap.