Decrease in new mortgages highlights extent of NSW downturn

New mortgage volumes have fallen as NSW’s market downturn continues to tighten its grip on the state, according to new research.

Data from the NSW Land Registry Services revealed that new mortgage volumes in the year to September 2022 decreased by 15,944 (8.7 per cent) when compared to the year preceding September 2021.

The research was based on official data from the NSW Land Registry Services and an analysis of newly originated mortgages in NSW. It excluded refinances and all mortgages registered on land titles outside NSW. Jerry Goldfried, head of data and insights at NSW Land Registry Services, explained the figures reflect the downturn experienced in the Sydney property market, which fell 1.3 per cent in October as part of a 10.2 per cent decline since peaking in January.

“The reason those banks experienced a decline in new mortgage volumes was because there were fewer active buyers in the market, compared to the property boom,” Mr Goldfried said.

“That can be seen in property price growth statistics, which show that Sydney’s median property price increased in the year to September 2021 but then fell in the year to September 2022.”

This resulted in the declines reported within NSW mortgage volumes throughout the 12 months to September 2022. During that time, just six lenders — three banks and three non-banks — reported a volume increase.

MyState Bank nearly doubled its volume (+96.4 per cent), while Pepper Money experienced a 2.1 per cent increase. Conversely, Regional Australia Bank experienced volume declines totalling 27.1 per cent, whereas the shortest drop was Bank of Queensland’s 2.5 per cent.

Australia’s big four banks all fell victim to mortgage declines in NSW, as did other large institutions, Macquarie Bank, ING, Bendigo, and Adelaide Bank.

Mr Goldfried did note: “Sometimes it can be easier to grow when you’re a smaller institution, because you’re starting from a lower base.

“It’s also possible those institutions took certain strategic or marketing decisions that allowed them to do more new business, even as the market as a whole went backwards.”

Consistent interest rate increases across the last six months have also increased the difficulty with which Australians are able to service loans. Research from Roy Morgan earlier this month found 21.1 per cent of mortgagors were “at risk” of mortgage stress, with the potential for this figure to rise to 23.3 per cent should the Reserve Bank of Australia choose to enact another cash rate increase at its next monthly meeting.

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