Home lending up as the Reserve Bank issues fourth rate pause

Australians are buying again but experts are warning mortgage holders not to become complacent, with another rate rise possible by the end of the year.

Another rate rise may occur this year. Picture: Sam Ruttyn

Homebuyer numbers are slowly growing as interest rates remain paused but some experts are warning mortgaged Australians that another rise may be imminent before year’s end.

New lending data released on Tuesday by the Australian Bureau of Statistics showed $24.82bn in new home and investment property loans were taken out in Aug­ust, up by 2.2 per cent from July.

It comes as the Reserve Bank decided to held rates steady for the fourth month in a row, keeping mortgage rates at their highest levels since 2011.

Geoff Lucas, chief executive of national real estate network The Agency, expects distressed listings levels to rise in coming months as the effects of mortgage stress grip households.

He also believes another rate rise might occur this year.

“The RBA is facing increasing inflationary forces possibly requiring more pain to mortgage holders in order to protect the mid-term future,” Mr Lucas said.

“More tough economic times (leading to) a healthy mid to long-term economy and housing market with more demand than supply.”

AMP chief economist Shane Oliver also conceded the near-term risk of another rate hike was still high, particularly with continuing high inflation.

“Economists seem to be split roughly 50-50 as to whether there will be another rate hike or not … our assessment is that the risk is around 40 per cent,” he said.

Finance Brokers Association of Australia managing director Peter White is calling for a cut sooner rather than later, however, saying decision-makers have underestimated the financial, personal, social and mental health impacts on borrowers after such a significant rise in a relatively short time period.

“More people are trapped in their mortgages with their banks, not being able to move to a better deal,” Mr White said.

ANZ expects Tuesday’s decision to be part of a prolonged pause to the cash rate, with inflation on track to return to the target range of 2 to 3 per cent in 2025 despite a rise in August.

The decision to hold was made against the backdrop of contin­ually rising property prices, which hit a record high through September.

Speaking to the new ABS figures, Canstar’s group executive of financial services, Steve Mickenbecker, said he believed an undersupply of homes rather than any frenzied demand was under­pinning the continued price increases in the current economic environment.

“The fall in average new loan size for owner-occupiers to $585,000, which is down 5 per cent from its peak at the start of 2022, is holding down lending volumes,” Mr Mickenbecker said.

“With property prices well on the way to recovery, this suggests that buyers have started compromising on the value of the property they are purchasing.”