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Home Lending Update for December 2021: Home Renovations Loan Sizes Shrinks Back


The monthly lending figures for December 2021 show that borrowing for home renovations jobs remains at very high levels. However, the average size of the loans taken on for this purpose has started to shrink quite substantially over recent months – both for investors and owner occupiers. In the 3 months to December 2021, the average size of loans for alterations, additions and repairs for owner occupiers was $168,750.

During the last three months of 2021, the number of loans to owner occupiers for home renovations was 84 per cent higher than a year earlier with the pace of growth even stronger for investors (+90 per cent).

In contrast, the size of the typical home renovations loan has been getting smaller over recent months. During the September 2021, owner occupiers borrowed an average of $186,000 in home renovations loans. This fell back to $164,600 during the December 2021 quarter. A similar trend has affected investors.

It is surprising that renovations loans are getting smaller given that house prices are elevated and at a time when materials and trades costs are rising quickly. It may be that there is some nervousness amongst consumers about the amount of borrowing they take on for renovations work. This is because speculation has grown louder with respect to interest rate increases. On Tuesday, the Reserve Bank announced that it was dialling down some of the monetary policy supports which have been in place since March 2020. The RBA has repeatedly pledged not to increase its cash rate until inflation has settled firmly into the 2 per cent to 3 per cent band.