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Home loan affordability continues to decline: November home loan market report

Bluestone home loan report

Our November home loan market report is out! The home loan affordability index shows that home loan affordability is still on the way down, thanks to higher house prices and lack of income growth.

“Recent strong house price growth has resulted in buyers having to borrow more and, with subdued incomes growth and flat interest rates, this has resulted in a higher proportion of incomes required for loan repayments.” – Dr. Andrew Wilson

Other home lending highlights

No change in RBA rate outlook 

There’s been a lot of speculation about the possibility of rising interest rates, in spite of the RBA forecast that rates won’t be going up until 2024. In a special feature in our home lending report, Dr. Wilson explains why change is unlikely. 

“With wages growth at record low levels and a spike in underlying inflation, the sobering prospect of falling real wages will only harden the clear resolve of the RBA and subdue irrational higher rate speculation – for now.” – Dr. Andrew Wilson.

Lifting of lockdown restrictions looks set to revive home loan markets – for now

The easing of Covid restrictions is allowing borrowers to engage again with local housing markets. It looks like we’ll see a rebound of lending activity in the next few months but this is likely to be impeded by affordability issues over the longer term.  

“National home loan activity has declined recently as a result of Covid lockdowns in Sydney and Melbourne and will revive with restrictions eased, but rising house prices and flat incomes will continue to reduce affordability and sideline home buyers.” – Dr. Andrew Wilson.

Investor market share rising sharply

Owner-occupier established home loans have declined sharply in VIC, bringing the national average down, while all states (except NT) reported increases in investor lending over the same time period. The total residential loan market share for investors is now at its highest level since August 2018. 

“Investor activity just keeps rising, with the September increase of 1.4% similar to August and the 11th consecutive monthly increase in lending for that group.” – Dr. Andrew Wilson

Download the full report here to find out more.

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