The mortgage market has been feeling the effects of rising interest rates over the past nine months, with new home loan values dropping for the ninth month in a row. According to new data from Rate City, new home loans have hit their lowest value since December 2020, with $25.79 billion in mortgages approved in October.
The effects of these interest rate rises are being seen across the entire mortgage market, with both investors and first-time buyers struggling to secure loans. The Reserve Bank of Australia (RBA) has kept the official cash rate at a record low of 0.25% for the past year, but lenders have raised interest rates on their mortgages, making them less attractive to borrowers.
The RBA has also increased the cost of borrowing for banks, which has led to a tightening of lending standards and stricter eligibility criteria for home buyers. This has made it more difficult for borrowers to obtain mortgages and has seen a decrease in the number of people taking out new home loans.
The effects of these interest rate rises have been felt most acutely by first-time buyers, who often have the most difficulty in meeting the stricter criteria. This has seen the number of first-time buyers taking out home loans drop significantly, with only $7.9 billion in mortgages approved in October, compared to $8.6 billion in the same period last year.
The impact of these interest rate rises has also been felt by investors, who have seen their borrowing costs rise and have had to pay more for their mortgages. This has seen a decrease in the number of investors taking out home loans, with only $17.8 billion in mortgages approved in October, compared to $20.2 billion in the same period last year.
The effects of these interest rate rises have had a significant impact on the mortgage market and have seen the value of new home loans drop for the ninth month in a row. This has made it more difficult for borrowers to obtain mortgages, particularly first-time buyers, and has seen a decrease in the number of people taking out new home loans. While the RBA has kept the official cash rate at a record low, lenders have raised interest rates on their mortgages, making them less attractive to borrowers and leading to a drop in the number of people taking out new home loans.
