Interest rate hikes and the rising cost of living are starting to bite Australians seeking their first home.
The Australian Bureau of Statistics reported on Friday the number of new owner-occupier first home buyer loan commitments fell 8.1 percent in January—its lowest level since February 2017.
Mish Tan, ABS head of finance and wealth statistics, said the decline coincided with the winding down of COVID-19 pandemic stimulus measures.
Rising interest rates are also dampening overall demand, with the Reserve Bank widely expected to again lift rates at its Tuesday board meeting.
The overall value of new loan commitments for housing fell 5.3 percent to $22.1 billion in January.
The value of total new owner-occupier loan commitments fell 4.9 percent to $14.7 billion, while new investor loan commitments fell six per cent to $7.4 billion.
Those in the market already are seeking better deals on their rates.
While the value of owner-occupier housing loan refinancing between lenders fell 1.9 percent, it remained close to record highs at $12.7 billion.
The figures come as a new survey shows spiralling living costs and the interest rate hikes needed to rein in rising prices have triggered the highest rates of financial hardship since the start of the pandemic.
Four in 10 Australians are experiencing some form of financial difficulty, which is the highest number recorded by NAB’s hardship survey since the early days of the COVID-19 outbreak.
The elevated December quarter results follow steady increases in reported hardship over three years.
Those experiencing hardship may be struggling to pay bills and rent, not having enough money to buy food, falling short on mortgage or loan repayments, or don’t having enough money to fund an emergency.
“Financial hardship can happen at any time and is often the result of sickness, job loss or over-commitment,” the NAB report said.
“Rapidly rising interest rates and cost of living are now also causing financial distress in more households.”
Despite aggressive interest rate hikes driving up repayments for those with variable-rate loans, the inability to meet mortgage repayments was the lowest contributor to the high rates of financial stress.
The survey of 2000 Australians found just one in 20 respondents were struggling to meet their home loan obligations, compared to one in five people who had missed paying a bill in the past three months.
Meanwhile, Housing Minister Julie Collins has revealed the government’s Regional First Home Buyer Guarantee has helped more than 2000 people to home ownership.
The scheme launched in October provides a government guarantee of up to 15 percent for eligible first-home buyers, so regional Australians with a deposit of as little as five per cent can avoid paying lenders’ mortgage insurance.
Almost half of the participants are in regional Queensland, while 38 per cent are from NSW.
“We want more Australians to have a safe place to call home, and this is just one way we are already delivering,” Ms Collins said.
