Three of Australia's major four banks have in the past week announced independent interest rate increases to standard variable mortgage rates, while CoreLogic's Home Value Index showed national property prices declining for an 11th consecutive month in August.
Housing Finance — July | By the numbers
- New Housing Finance Approvals (number of loans) to owner-occupiers increased +0.4% in July — the market had forecast a -0.1% result. Approvals declined in June by -0.8% — not as sharp as initially estimated at -1.1%.
- By value, new lending commitments (including owner-occupiers ex-refinancing and investment) fell -0.8%m/m to $A25.011bn (-8.2%Y/Y). June's outcome was upwardly revised to -1.0%m/m, -8.3%Y/Y.
Housing Finance — July | The details
July saw a broad-based decline in 'new' lending with the value of commitments down for; owner-occupiers (ex-refinancing) -0.4% to $14.765bn (-2.3%Y/Y) and investment -1.3% to $10.247bn (-15.7%Y/Y).
Activity from first home buyers was little changed in the month (+0.6%), while the value of lending to the segment eased slightly (-0.6%m/m). Through the year, the number of loans written increased by 6.6%, while lending is running at a robust 14.5%.
Refinancing lifted 5.4% in July and is now running at an annual pace of 9.7% — the strongest pace in 2-years.
Taking a look at the state-based activity, the number of loans written to owner-occupiers in July increased in; Tasmania (+5.2%), Western Australia (+2.2%) and Victoria (+1.5%). This was moderated by New South Wales (-0.7%) — now -8.5%Y/Y — and South Australia (-0.5%). Queensland was flat (+0.1%).
Construction-related approvals — including loans to construct new dwellings and to purchase newly constructed dwellings — eased 0.3% in the month to be 10.3% weaker through the year. However, the monthly result of around 8,500 is still fairly strong.
Housing Finance — July | Insights
July's result was broadly in line with recent developments. APRA's measures to restrict credit growth to investors are still working their way through as banks tighten lending standards. Growth in lending to owner-occupiers has also contracted over the past year, but the level of lending in value terms is, by comparison, only modestly weaker. The recent mortgage rate increases, together with a slowing investor segment and cooling property market conditions are a headwind to housing finance growth.
