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The number of new investment loans for dwellings fell in the December 2024 quarter, the first drop since the March quarter of 2023, according to ABS research.
The number and total value of new investment loans approved slipped lower in the quarter ended December 2024 compared to the previous period, data from the Australian Bureau of Statistics (ABS) showed.
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According to the Lending Indicators data, released on (12 February), there were 48,876 new investment loans approved in the December quarter, a 4.5 per cent drop (or 2,293 fewer loans) compared to the previous quarter.
The total value of new investment loans also fell, coming in at $32.4 billion, a fall of 2.9 per cent (or $1 billion) from the record high of $33.4 billion in the September quarter.
Despite the December quarter fall, ABS head of finance statistics Mish Tan noted that the value of new investment loans during the 2024 calendar year, in original terms, reached $125.1 billion, 29.8 per cent higher than the $96.4 billion value of new loans in 2023.
The average investor loan size rose 7.9 per cent year on year to $674,316.
The strength in investment loans throughout 2024 was driven by NSW (up 29.3 per cent), Queensland (40.9 per cent higher), Western Australia (rising 55.9 per cent) and South Australia (up 40.7 per cent).
Excluding South Australia, these states saw the strongest falls in the December quarter.
New lending falls
Indeed, the ABS figures show that, overall, the total number of new loan commitments for dwellings fell 0.4 per cent, to 132,082 new loans, in the December quarter of 2024.
In seasonally adjusted terms, the value of new loan commitments for the December quarter totalled $87.23 billion.
The average loan size rose by $24,777 to $665,978.
The largest increases in value were in Queensland (growing 19.6 per cent), Victoria (up 12.3 per cent) and NSW (rising 10.6 per cent).
Owner-occupier loans continue upward trend
However, the ABS data shows that the number of new owner-occupier home loan commitments (excluding refinancings) rose for the third consecutive quarter in the three months to December, up 2.2 per cent, to 83,206 on the sequential period.
The total value of new owner-occupiers home loans approved was $54.8 billion, a rise of 4.2 per cent or $2.2 billion.
The number of new owner-occupier first home buyer loan commitments for dwellings rose 1.3 per cent in the quarter, while the value rose 1.5 per cent (to $16 billion).
Mortgage lending up 13.6% in 2024
In original terms, the value of new home loans during the 2024 calendar year reached $205.7 billion, up 13.6 per cent from 2023.
The increase in new mortgages comes as the value of personal loans hit a new high in the December quarter of 2024.
Industry reacts
Commenting on the research, Tan said: “This is the first quarterly release of lending indicators, which contains improved statistics on lending and home loans for the December quarter 2024.”
“While the number of new home loans rose in the December quarter, New South Wales partially offset this growth, falling 2.3 per cent, following a fall of 0.4 per cent in the September quarter,” Tan added, reflecting on what was driving new mortgage growth.
Commonwealth Bank of Australia (CBA) economist Harry Ottley noted that while the number of new loans had been growing more slowly over the past year, he said: “The recent growth in overall new housing lending has been driven in large part due to strength in investor lending.”
Analysing the figures, Westpac economist Neha Sharma said: “The softening here came as something of a surprise given affordability strains on owner-occupiers.
“Overall, loan demand in 2024 remained solid despite headwinds from high house prices and interest rates. Our WestpacMI Consumer Sentiment survey shows buyer sentiment is improving, and with a potential rate cut on the table at next week’s RBA meeting, the up-trend in loan demand should continue.”
CoreLogic economist Kaytlin Ezzy added that the mixed results could be due to improved relative affordability across the regions, an increase in listing levels across the capitals and a second wind in regional internal migration.
“With demand skewing towards the more affordable end of the market, it’s not surprising to see value growth shift away from the capitals, towards the regions, as cash-strapped buyers look further afield for more affordable markets,” Ezzy said.
[Related: Major changes to HECS home loan rules]
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