Below are some statistics you might find interesting - or baffling - and ones you can rely on to settle whatever argument you're trying to make, compiled from the likes of the Australian Bureau of Statistics (ABS) and the Reserve Bank of Australia (RBA).
Average Home Loan Interest Rates
Since then, interest rates have started to climb, as seen in the chart below. Fixed-rate home loans, which at one point enjoyed their time in the sun, initially bounced back more sharply than variable loans, but this has turned in recent months.
Average Home Prices
The national median property value is a tick over $807,000, according to CoreLogic. CoreLogic is an independent property analytics firm, and publishes a monthly Home Value Index. It's generally the most reliable barometer for which way the property winds are blowing!
This median value includes both units (apartments, townhouses) and detached houses, but it doesn't tell the whole story. Since Covid, Brisbane has been the property price darling, posting continuous record prices. Lately, Perth and Adelaide have joined in on the action.
Consequently, Melbourne has slipped from second to sixth place in the rankings. However, the makeup of a city's housing stock can also influence the indicator; Melbourne has a much higher proportion of units compared to other cities, which drags down the average.
Home Loan Rates vs RBA Cash Rate
The Reserve Bank's cash rate target is essentially Australia's base risk-free interest rate for the banks. Comparing it with the banks' standard variable rates (SVR) shows the margins in which the banks are operating. From 2019 through to early 2022, the RBA sent the cash rate to record lows at a rapid pace - SVRs decreased drastically too, but not quite as rapidly as the cash rate, as seen by the wider gulf during that period.
Average Home Loan Size
The current average home loan size for owner occupiers, by our calculation of original ABS data, is $636,000. Investors' average loan size is starting to break away, valued at $649,000.
It's $540,000 for first home buyers, which is a record high, but obviously much lower; the last time the overall owner occupier average was this low was between March and April 2021.
Record-low interest rates during the Covid pandemic meant borrowers were able to borrow more to finance a home purchase. Rather than see it as a money saving opportunity, Aussies found themselves with better purchasing power, helping to bid-up the price of dwellings across the board.
Refinancing
The average amount that owner occupiers refinance is $588,000, while it's $639,000 for investors. This includes internal and external refinances, where internal means asking their current lender for a better deal.
At the risk of sounding like a broken record, refinancing values generally took off in the Covid pandemic as home loan customers rushed to find a better deal.
As interest rates started to rise again, refinancing reached new record highs as customers sought a better deal before they couldn't. However, the level of refinancing in late 2023 started a steep decline, implying many borrowers already in the system are unable to find better deals, or unable to refinance at all.
There's every chance with rising interest rates and reduced serviceability, some home owners will be stuck paying a noncompetitive rate yet unable to refinance - dubbed a mortgage prison.
Average Refinancing Value
As interest rates plummeted and home values increased during the Covid pandemic, customers refinanced increasingly large debts. Refinancing is generally only recommended if borrowers have at least 20% equity, lest they want to pay lenders mortgage insurance (LMI).
Owner Occupiers vs Investors
Owner occupiers in any given month make up around two-thirds of the number of new home loans written. However, more recently, investors have taken up a bigger slice of the pie, seeing opportunities in states such as WA, SA, and Queensland, which have experienced strong price appreciation.
Owner occupiers have generally been a larger class of borrower than investors. This was more pronounced from around 2017 to 2018 when new lending restrictions were put in place for investors. It took around four years for lending values to recover and for investors to re-enter the market at previous levels.
First Home Buyers
First home buyers can be either investors or owner occupiers, and are an interesting subset of borrower to look at. They tend to borrow less on average, as mentioned earlier, and could be more sensitive to interest rate rises and high home prices.
Towards the end of 2020, first home buyer values were at all-time highs but as home prices reached lofty heights, they tended to pull out of the market.
However in late 2023 and 2024 there has been a slight uptick in first home buyer volumes, which could be an effect of record rental price growth forcing many hands into home ownership.
Fixed vs Variable-Rate Home Loans
As the RBA cash rate hit all-time lows and funding for big banks reached all-time highs, the share of new home loans on fixed rates skyrocketed. At one stage they made up nearly half of all new home loans written in mid-2021.
However, as rate rises started to bite, the popularity of fixed-rate loans plummeted, below even pre-pandemic levels. Variable-rate home loans reign supreme, with fixed-rate loans making up less than 2% of new loans coming into the market (including refinances).
Interest-Only Home Loans
Interest-only home loans used to be a lot more popular, particularly among investors where they were the payment type of choice at one stage. However, the long period of record-low interest rates made paying off the principal a lot easier, driving down the use of interest-only loans. Interest-only home loans also plummeted in popularity when new regulations for investors were introduced in 2017.
More recently, it looks like there's been a fairly benign uptick in 'IO' lending, despite rate rises sending mortgage repayments to the moon.
Annual Housing Credit Growth
Annual housing credit growth is a useful marker as to how much Australians love loading themselves up with debt. After investor regulations were introduced in 2017, credit growth to that sector took a nosedive, even turning negative. It has not yet returned to its highs experienced earlier in the 2010s.
Since interest rate rises took effect in mid-2022, credit growth for owner occupiers has come off the boil as well, but has started gathering steam again in 2024.
Popularity of Offset Accounts
An increasing number of Australians are recognising the benefits of using offset accounts to save money and manage home loan repayments.
According to the InfoChoice State of Aussies' Savings Report released in July, offsets are about equally as popular as savings accounts among mortgage holders. This further soars to 67.1% among mortgagors with $50,000 or more in savings. Offsets are also popular with property investors.
| Savings Method | Mortgage Holders | Property Investors |
|---|---|---|
| Term Deposit | 3.0% | 11.2% |
| Transaction Account | 9.1% | 9.6% |
| Savings Account | 38.9% | 41.0% |
| Offset Account | 38.2% | 36.2% |
| Redraw Account | 8.4% | 1.1% |
| Physical Cash | 0.6% | 0.0% |
| Other | 1.7% | 1.1% |
Source: InfoChoice State of Aussies' Savings Survey, July 2024. n=1,092.
To make the most of offset accounts, which typically come with extra fees, the balance needs to be high enough to the savings in interest outweigh the cost.
Supporting these findings, the latest APRA Quarterly ADI Property Exposure statistics revealed that the total balances in offset accounts was just over $265.5 billion in the June 2024 quarter. This is down about $6 billion on the quarter prior, which was a record high, and puts it back at December 2023 levels.
Image by Eric Nopanen on Unsplash
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