Approvals unlikely to reach pandemic highs until 2036, analysis finds
Australia’s home lending sector is not expected to return to the activity seen during the pandemic until at least 2036, according to new research from Money.com.au.
The findings indicate a prolonged period of subdued lending, with projections suggesting it could take more than 10 years for volumes to match those recorded during the COVID-19 boom.
Data from the Australian Bureau of Statistics shows that the number of owner occupier loans peaked at 1,322 per day in the March quarter of 2021. This surge was driven by a historically low cash rate of 0.1% and significant government intervention at the height of the pandemic. Since then, lending activity has declined and is forecast to recover only gradually.
By 2036, the average size of a new home loan is expected to reach $1,145,982, a 69% increase from the current average of $676,434.
“The stimulus-fuelled peak of 2021 was short-lived, and led to a major trough which we’re still slowly digging our way out of,” said Debbie Hays (pictured right), mortgage expert at Money.com.au.
“The fact it will take a decade to return to those levels under normal growth shows just how distorting housing bubbles can be to the wider market. There may also be smaller peaks and troughs along the way. These disproportionately affect homeowners and first-time buyers, who are the most exposed to swings in borrowing costs and property prices. When volumes surge, prices rise, and those without a foothold in the market are locked out.”
Hays noted that the lending environment in the next cycle is likely to be markedly different. “Borrowers will be facing much higher average loan sizes relative to their incomes, tougher affordability pressures, uncertainty in the jobs market due to AI, and likely an ongoing shortage of housing supply,” she said. “That’s if another global shock doesn’t intervene before then.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
