Amanda Watt
A drop in the number of home loans taken in January and a big fall in the average loan size taken by first home buyers given falling or easing house prices highlights the prospect of greater home loan affordability in 2016, according to the head of banking business act., Amanda Watt.
Over the month of January, the value of new home loans taken by property buyers dropped 3.4% to $31.9 billion, according to new data from the Australian Bureau of Statistics (ABS). The value of home loans for owner occupiers dived 4.3% to $20.5 billion in January from December while the value of home loans taken by investors also fell by 1.6% to $11.4 billion as buyers withdrew from the property market.
Reflecting greater home loan affordability, the average loan size for first home buyers fell by $9,300 to $338,800 between December and January. The average loan size for all owner occupied housing commitments fell by $5,400 to $372,400 for the same period. The overall number of home loans taken by owner occupiers in January plunged 3.9% to 55,786.
“While January is traditionally a slower month, these are still positive signals. Home buyers will welcome any drop in funds needed to buy their first home or make a property investment and the latest housing finance data highlights that buyers borrowed almost $10,000 less to buy their first home in January,” said Watt.
“While the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments was unchanged at 15.1%, the good news is that growth in house prices has slowed in some cities while prices have dropped elsewhere, so people are needing to borrow less to buy.
“Auction clearance rates nationwide have fallen from last year’s highs and are trending downwards and investor demand for property has cooled due to higher interest rates on loans. Meanwhile, a drop in share prices in January could be drawing money away from the property market into equities. All of these factors are helping to take pressure off property prices,” said Watt.
Fixed-rate loans, as a proportion of all new home loans, rose to 13.6% in January from 12.9% in December, as borrowers took advantage of low fixed rates, which have in some cases fallen below variable home loan rates due to downward pressure on wholesale market interest rates.
act. is an innovative banking service that redirects profits back into social projects. For each product act. has, including home loans, act. allocates ‘impact dollars’ – real dollars taken from the profit it earns – and it gives them back to its customers, who can then donate to a community-focused project of their choice listed on letsact.com.au.
Each month, act. will put some of the profits it’s made from its banking operations into consumers’ impact accounts. Consumers can then use the dollars in those accounts to support projects listed on letsact.com.au. The calculator on act.’s banking page reveals how impact dollars customers generate each month by banking with act.
act. recently won Money magazine’s 2016 Best of the Best award for Best Innovative Banking Product. “This award is evidence that act. customers can make a difference in the world just by doing their daily banking and getting involved in crowdfunding. As we grow our business, we are giving more impact dollars to customers to donate to social projects, thereby helping us and them to make a difference. As a community inspired banking business, we are using some of our profits to make the world a better and more liveable place,” said Watt.