Australian housing finance commitments increased by 1.5% in February to $26.4bn, rebounding from a 3.4% decline through December and January. Commitments rose to all major segments but remain near cycle lows in the construction-related area.
February's 1.5% lift in commitments came in slightly weaker than expected (2%); however, backward revisions in today's release significantly reduced the decline in lending (likely seasonally related) over December and January from -7.9% to -3.4%. At $26.4bn, commitments stand 14.5% above their cycle low reached in January 2023 ($23.1bn).
Lending to the owner-occupier segment was up 1.6% for the month ($16.9bn), with the underlying volume of loans written advancing in most categories. Upgraders saw a 1.7% rise in commitments ($13bn) on a 0.4% lift in loan volumes (21.1k). First home buyer activity lifted, reflected in increased lending (+4.8% to $4.9bn) and loan demand (+4.3% to 9.4k).
Construction-related lending lifted a modest 0.6% and loan volumes rose 3.6%; however, their respective levels at $2.6bn and 4.3k remain near their lows for the cycle, with higher interest rates, capacity pressures and weak sentiment all contributing factors.
Turning to the investor segment, commitments rose by 1.2% to $9.5bn, broadly reversing a 1.3% fall over December and January. Lending has increased significantly over the past year (21.5%yr), with very tight rental markets putting upward pressure on rents, an attractive backdrop for investors.
Refinancing (3%) saw its first rise since July but at $16.5bn the level is down sharply on a year ago (-17.9%). The peak for refinancing came in mid-2023, as many mortgages on fixed rates rolled on to higher variable rates.
