Home loan intentions drop

New research has shown a drop in the number of people intending to take out home loans in the next year.

According to Roy Morgan, in the three months to October 2018, 1.21 million people said they intended to take out a home loan within 12 months.

This is a decline of 260,000 people, or 17.7%, from the same period last year.

The findings come from the group’s Single Source Survey, which is based on face-to-face interviews with more than 50,000 people in Australia.

Over the year there were deteriorating levels of home loan intentions. In the January quarter of this year, the level of home loan intentions was 7.3% of the population, at 1.48 million people.

In the April quarter this fell to 6.3% of the population, at 1.29 million people. The July and October quarters both fell to the current levels of 5.9% of the population.

Despite lenders recording more first home buyers entering the market, the research from Roy Morgan said that first home intention has dropped.

In the October 2018 quarter only 411,000 first home borrowers said they intended to take out a loan in the next 12 months, down by 44.5% on the 740,000 recorded a year earlier.

The largest group of people intending to take out a home loan was existing borrowers who plan to switch their home loan to a different provider.

This segment accounted for 549,000 people or 45.4% of all intenders and held steady, having recorded 544,000 at the same time last year.

The biggest gain over the last 12 months was in the group that have had a loan in the past but wish to move and take out a loan. They number 249,000 currently, an increase of 64,000 or 34.6% over the year.

Norman Morris, industry communications director, Roy Morgan said, “The decline in home loan intenders over the last year is likely to have a major impact on banks in the coming year, particularly as the drop has come from first home buyers who are major generators of increasing volumes.

“The reduction in first home buyers is likely to come from a number of potential reasons, including uncertainty as a result of declining housing values, likely interest rate movements, mortgage stress and job risks. 

“The current high level of negative publicity given to borrowing by the Finance Royal Commission is also likely to be impacting on both the supply and demand for home loans. The potential for the tightening of lending criteria and issues relating to mortgage brokers are just some of the likely issues to have a negative impact in this market.”