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The average home loan in Australia is $607,963 for owner occupier homes, including loans for purchases of established properties, construction loans and refinancing of existing home loans. That's according to the latest data from March 2024 from the Australian Bureau of Statistics.
The average home loan size is largest in New South Wales and lowest in the Northern Territory, mirroring the median values of properties across the country.
Looking at the breakdown of loan sizes in more detail we can see that first home buyers are currently taking out smaller loans than refinancers, both across owner occupier and investor loans.
This steady increase in loan size comes despite surging interest rates in the last couple of years. CoreLogic Australia’s Head of Research, Eliza Owen, explained to Money.com.au that this is down to stubbornly-high property prices.
“One of the extraordinary phenomena of the current rate-hiking cycle is that despite higher interest rates, we've also seen property values not only recover from a short, sharp decline where the market bottomed out in the beginning of 2023, but values have actually managed to climb back to new record highs.”
“Part of the reason that home values have continued to increase in a high interest rate environment is because of a surge and an acute level of net overseas migration, changes in households formation where there are fewer people living per dwelling, and also the constraints that exist in the construction sector. At the moment the market is for higher income households.”
Eliza Owen, Head of Research at CoreLogic Australia
The average new home loan interest rate is 6.28% p.a. for homeowners across all loan types. The average variable interest rate is also 6.28% p.a., while short-term fixed rates are currently considerably lower than longer-term fixed rates.
Investors pay higher rates than owner occupiers – 6.53% p.a. on average.
Loan type | Owner occupier | Investor |
---|---|---|
All loan types | 6.28% p.a. | 6.53% p.a. |
Variable rate | 6.27% p.a. | 6.53% p.a. |
Fixed rate 1-3 years | 5.86% p.a. | 6.48% p.a. |
Fixed rate 4-5 years | 6.88% p.a. | 7.32% p.a. |
Principal and interest | 6.22% p.a. | 6.44% p.a. |
Interest only | 6.91% p.a. | 6.66% p.a. |
Current home loan rates are as high as they have been in years, with longer-term fixed rates more than three times higher than they were in late 2020 and early 2021.
The gap between rates for new and existing borrowers (aka the 'loyalty tax') is currently the narrowest it's been in some time. But new borrowers still enjoy a slight discount.
“I think a big part of the market is waiting for rates to drop. The trouble is, as soon as rates drop, prices take off and people risk being priced out. Saying that, a lot of first home buyers are still aggressively trying to get into the market, using the grants and other government schemes on offer.”
Mansour Soltani, Money.com.au's expert mortgage broker
The average monthly home loan repayment in Australia is $3,755. But mirroring average loan sizes, the repayment amount varies significantly across states and territories. Unsurprisingly, borrowers in New South Wales pay most on average – $4,757. The average repayments in the Northern Territory is around 45% lower at $2,605.
As the graph below shows, borrowers are spending considerably more on mortgage repayments now than they were only a few years ago.
Location | Average home loan amount | Average monthly repayment |
---|---|---|
Australia overall | $598,624 | $3,755 |
NSW | $744,101 | $4,596 |
Vic | $590,475 | $3,647 |
Qld | $571,954 | $3,533 |
SA | $519,165 | $3,207 |
WA | $521,863 | $3,223 |
Tas | $461,961 | $2,853 |
NT | $461,538 | $2,851 |
ACT | $579,259 | $3,578 |
We analysed a sample of more than 1,800 borrowers who recently requested a home loan through Money.com.au. Based on this research, here’s a breakdown of who is applying for a home loan in Australia.
The average first home buyer home loan deposit is $159,000. This has increased by more than 50% since 2020, according to the National Housing Finance and Investment Corporation.
Naturally, the time it takes to save up a deposit has risen too. It now takes first home buyers in Australia around 10 years on average to save up a 20% home deposit, based on analysis by ANZ and CoreLogic. Again, the distribution across the country is very uneven – if the average person wanted to buy a house in Sydney, it would take them 15.7 years to save the deposit.
Home lending in Australia is heavily concentrated around the 'big four' banks. In fact, the combined value of home loans with the major banks is around three times that of all other banks in Australia combined.
For borrowers who refinance their home loan, around 60% do so with a different lender. And more than 70% of all home loans are taken out with the help of a mortgage broker, according to the Mortgage & Finance Association of Australia.
Monthly home lending has fallen from the highs of late 2021 and early 2022. But compared to a year ago, current overall lending is up by around 17% overall, driven by both growing owner-occupier (+11%) and investor (+31%) lending.
“When you compare investor growth in new housing finance to owner occupiers, it's much stronger,” says Eliza Owen.
“Investors in this country have a capital growth strategy and I think they're anticipating growth off the back of a potential cash rate reduction.”
However, according to Dr Nalini Prasad, a Senior Lecturer at UNSW's Business School, new lending growth is likely to be sluggish in 2024.
“Households have spent the large savings buffers that they accumulated during the COVID-19 pandemic. These buffers initially insulated household spending from the increase in interest rates, but with these savings buffers gone, interest rate increases are going to have more bite.”
She said lending is likely to recover in the longer term, as high overseas migration into Australia continues to support the housing market.
Even for the remainder of 2024, some sectors will continue to perform strongly.
“Sectors of the market which have a large fraction of cash buyers are likely to outperform the overall market in 2024. Cash buyers are typically wealthier, older individuals who are unaffected by changes in interest rates. These buyers are more likely to purchase properties in regional areas where they intend to retire.”
Dr Nalini Prasad, Senior Lecturer, UNSW Business School
The recent volatility in property lending levels has been felt most sharply in the larger states, particularly Victoria which as struggled in the latter parts of 2023 and early into 2024.
Fixed rate lending has fallen off a cliff and now makes up a tiny portion of the home loan market. Again, an expectation that interest rates are due to fall is the likely driver for more borrowers choosing a variable rate.
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