Australian mortgage lending lifted by 1.4% across the final quarter of 2024 to $87.2bn, its highest level since Q1 2022 on the eve of the RBA's tightening cycle. Rate hikes saw lending slow dramatically through 2022 and 2023, but the tide turned in 2024 as supply/demand pressures emerged as the driving factor in the housing market. The housing finance series has returned today following a revamp from the ABS. The series has shifted from a monthly to a quarterly frequency with definitional changes and revised seasonal adjustment processes. Time will be needed to gain a more considered feel for the new format and its intricacies.
(Source: ABS)
The 1.4% rise in lending commitments in Q4 ($87.2bn) continued the upswing that emerged in late 2023/early 2024 (see chart below). However, the pace slowed significantly from the gains seen through Q2 (9.2%) and Q3 (5.3%). While lending to owner-occupiers increased by 4.2% ($54.8bn) - gains came through for upgraders (3.5%) and first home buyers (1.5%) - the investor segment saw a 2.9% fall in lending ($32.4bn), its first decline since Q1 2023.
(ABS Chart)
Lending commitments rose despite underlying loan volumes falling slightly in Q4 by 0.4% to 132.1k. Loan volumes are 16% off the 2021 cycle highs (157.2k) but are up 20% from the recent low in Q1 2023 (110k) after RBA rate hikes had taken hold (see chart below). The 4.2% rise in owner-occupier lending was underpinned by a 2.2% lift in loan volumes (upgraders 1.2% and first home buyers 1.3%), which at 83.2k reached their highest level in more than 2 years. By contrast, the 2.9% pullback in investor lending was matched with a 4.5% contraction in loan volumes (48.9k).
(ABS Chart)
