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FHBs coming back into market as mortgage activity rises

by Annie Kane11 minute read

After reaching a five-year low in February, first home buyer loans began ticking up in March amid a rise in new mortgage lending, new ABS data shows.

The number of new owner-occupier first home buyer loan commitments rose 15.8 per cent in March 2023 (seasonally adjusted), according to new data from the Australian Bureau of Statistics (ABS).

Despite home loan rates having risen by 25 bps between February and March 2023, a larger number of first home buyers (FHBs) took out a mortgage to enter the property market in March.

According to the ABS’ Lending Indicators data for the month of March 2023, a total of 8,128 owner-occupier first home buyers (FHBs) took out loans in March 2023.


Every state and territory except the ACT saw increased FHB loan activity in March, with the greatest demand coming from Victoria. More than a quarter (28 per cent) of all new FHB loan commitments came from Victoria.

The second-busiest mortgage market for new FHBs in March was NSW (1,926 FHBs), followed by Queensland, Western Australia, South Australia, the ACT and Tasmania. The Northern Territory had the lowest number of FHBs in market — at 71 — but reached a six-month high.

Source: Australian Bureau of Statistics, Lending Indicators, March 2023

However, Mish Tan, ABS head of finance statistics, noted that despite the monthly rise in owner-occupier FHB lending, the number of these commitments was 21.8 per cent lower compared to a year ago and 50.5 per cent lower than the January 2021 high.

“During the second half of 2020, first home buyer lending reflected the strength in demand for housing during the pandemic, with new commitments peaking in January 2021 and declining by half since then,” Dr Tan said.

Indeed, FHB lending activity reached a five-year low in February 2023, when it fell 4.2 per cent to 7,021 FHB mortgages.

This followed on from a rapid succession of interest rate increases, after the Reserve Bank of Australia (RBA) began its rate-hiking cycle in May 2022 to curb runaway inflation.

On a dollar value basis, FHB mortgages were up 12.3 per cent in March 2023, increasing to $3.94 billion. This is 21.8 per cent down on the volume seen in March 2022.

The average new loans for first-home buyers fell from $500,00 to $485,000.
Overall value of home loans rises

Looking across the full lending market, the ABS figures showed that the value of home lending rose by 4.9 per cent to $23.96 billion in March, after 13 months of consecutive declines.

While this was the first monthly rise since January 2022, it remained 26.3 per cent lower compared to a year ago (in seasonally adjusted terms).

Owner-occupier lending was up 5.5 per cent to just under $16 billion, while investor lending was up 3.7 per cent in the month, to just under $8 billion.

“The value of new owner-occupier loan commitments in March remained 25 per cent lower compared to the same time last year, while new investor loan commitments were 29 per cent lower,” Dr Tan said.

There is no seasonally adjusted or trend data available for the number of owner-occupiers or investors for total housing as the data was collected from July 2019.

The value of new owner-occupier housing loan refinances between lenders rose 3.9 per cent to another record high of $14.2 billion in March 2023. 

Borrowers continued to switch lenders for lower interest rates as the RBA’s cash rate rose.

Elsewhere, the value of total new loan commitments for fixed-term personal finance fell 3.1 per cent. Lending for the purchase of road vehicles rose slightly by 0.7 per cent.

More to come.

[Related: Brokers prepare FHBs for end of NSW property tax]

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