Over 1.1 million borrowers have never seen a rate hike

It’s of concern to Sally Tindall, research director at RateCity, who said, “there is a generation of mortgage holders who could be in for a shock when their monthly repayments automatically start rising”.

Digging into data, the Australian Bureau of Statistics (ABS) lending indicator statistics for the month of December shows that 1,141,592 first-time home buyer owner-occupier loans have been settled in original terms since the last time there was a rate hike.

Using the RBA cash rate data and ABS lending indicators above, RateCity has made a market comparison showing that a $363,421 loan back in November 2010 with a cash rate of 4.75 per cent is now worth $602,035 at 0.10 per cent. That sums up to a -4.65 per cent or $238,614 difference.

Construction and purchase of new and existing houses were included in the RateCity note values, while purchase of land, renovation loans, and refinances were not included.

New lending record highs

Further analysis of the recent ABS lending indicator data shows record highs for the value of new house lending, in general, and for new investor lending.

In seasonally adjusted figures, a total of $32.81 billion in new mortgages were finalised in December, up 4.4 per cent from November. ​

Investor financing increased to a new high of $10.34 billion, up $241 million, or 2.4 per cent, over the previous month.

For the month of December, owner-occupier lending climbed by $1.13 billion, up 5.3 per cent from the previous month.

A slight lift of 1.3 per cent in first-time home buyer loans was reported in December, albeit still 21.5 per cent lower than the same time last year.

Despite these record highs for the recent month, there is indeed some indication that the market could be losing heat, Ms Tindall opined.

“The value of investor loans hit another record high this month, but the pace has notably slowed, which could be a sign some of the heat is coming out of the market,” she said.

Data may have revealed that the mortgage market is still thriving, but Ms Tindall has warned of future rate hikes, which may cause things to shift.

“While most people will be able to take future rate hikes on the chin, albeit through gritted teeth, for some people who have been hit hard financially by COVID or who haven’t seen a decent pay rise in some time could find it difficult to balance the budget,” she said.