Money’s Mortgage Insights: WA Still Leading Loan Growth & QLD Becomes the Second Largest Investor Market

Money.com.au has released its latest Mortgage Insights report, showing key trends in the Australian home loan market.

See the full report on LinkedIn.

Overall loan market

The average new loan size in Australia is $642,121 — up 7.2% annually. For investors, the average new loan size is $654,056, an increase of 7.7% annually.

The annual growth rate in the number of owner occupied loans jumped from 3.4% to 5% within a single month.

“Despite conversations around Australia’s housing affordability crisis, the increase in loan numbers suggests renewed confidence in the housing market, potentially driven by recent lender cuts to fixed rates across multiple products, and predictions that a rate cut is on the cards in 2025,” says Peter Drennan, Money.com.au‘s Research & Data Expert.

Western Australia and Victoria are leading the way in owner occupied loan growth, with annual increases of 9% and 7%, respectively. This is compared to the more modest 4% growth seen in New South Wales and Queensland. All other states recorded declines in owner occupied loan numbers.

Money.com.au’s Home Loans Expert, Mansour Soltani, says Australia’s property market dynamics are shifting.

“Western Australia has been the standout market of 2024, but with Victoria now hot on its heels, we’re seeing a significant shift in buyer activity. My prediction for 2025 is that as interest rates drop, buyer activity will ramp up again in the Eastern seaboard states — NSW, VIC, and QLD. Meanwhile, Western Australia and South Australia, which are becoming saturated markets, may start to stabilise,” he says.

Investor loan insights

It’s official! Queensland has overtaken Victoria as the second-largest investor market, now holding 23.4% of investor loans for the year — 0.4% more than Victoria. In September, Queensland recorded 4,593 investor loans, nearly 700 more than Victoria. Nationally, investor loan numbers continue to rise, with an annual growth rate of 19%. Western Australia

is leading the charge once more, showing a substantial 43% annual growth in loan numbers, followed by Queensland and New South Wales with rises of 24% and 20%, respectively.

Notably, the Northern Territory saw a 50% increase in loan numbers in September, with 99 investor loans for the month, up from 66 loans a year ago, though numbers remain small overall at 1,093 for the year. Investor loans in the NT grew 14.3% annually.

“The Northern Territory housing market presents a compelling opportunity for investors. While house prices have remained stable or declined, rental yields, particularly in Darwin, are among the highest in Australia,” says Mansour.

First home buyer loan insights

First home buyer (FHB) loans have grown 8% annually, showing steady increases across all states. Victoria and New South Wales lead the way, posting impressive growth rates of 14% and 13%, respectively, followed by South Australia at 9%, Queensland at 6%, and Western Australia at 4%.

Refinancing insights

The downward trend in external refinancing (borrowers switching to a new lender) has continued, dropping 25% annually. On the other hand, internal refinancing increased by 14% annually.

“A turnaround is likely only when the cash rate changes, creating more competition between lenders,” says Peter.

Refinance loans now total 564,797 annually — down 14% from the peak of 653,921 in August 2023, marking a decline of nearly 90,000 loans.

Interest rates

With the cash rate on hold, new variable rate loans remain steady at 6.27%. However, all loans under $600,000 have seen a slight drop of two basis points.

Fixed rates under three years are now 37 basis points lower than variable rates for owner occupied loans, with the average fixed rate for that duration standing at 5.90%.

MONEY’S BONUS INSIGHT:

Victoria had the highest population growth last year, but its loan growth fell behind NSW and Queensland due to differing loan types. Victoria has a larger share of owner occupier (27.6%) and first home buyer (31.7%) loans compared to NSW.

However, investor loan growth is weaker in Victoria, making up just 21.2% of the market with only 5% annual growth, trailing behind Queensland’s 24% and NSW’s 20% annual growth.

“Property prices in Victoria, particularly in Melbourne, remain more affordable than in Sydney, attracting more owner occupiers and first home buyers. However, with the highest property tax rates in the country, investors are leaving Victoria in favour of states with lower taxes and lifestyle appeal, like Queensland,” says Mansour.