The value of Australian borrower-accepted housing finance commitments increased at their fastest pace in a single month on record with a 12.6% lift coming through in August in response to recent policy stimulus measures such as the RBA's Term Funding Facility that has helped lower borrowing costs as well as government initiatives to assist the housing market.
Housing Finance — August | By the numbers- Housing finance commitments ($ value, ex-refinancing) advanced by 12.6% in August to $21.288bn (median forecast was for a 1.9% lift) after an 8.8% gain in the month prior. Annual growth increased from 11.7% to a 6½-year high at 19.3%.
- Owner-occupier commitments posted a second consecutive record increase for a single month in lifting by 13.6% to $16.276bn (prior 10.7%), elevating growth through the year to 29.2% from 18.5%.
- Refinancing commitments to owner-occupiers declined by 7.4% in August (+26.3%yr) to $7.262bn as they continue to come down from the May 2020 peak of around $10bn.
- Investor commitments posted their sharpest monthly increase in 4 years rising by 9.3%m/m to $5.013bn (prior 3.5%), though the level is -4.6% compared to a year earlier.
Housing Finance — August | The details
Activity in Australia's housing market is being buoyed up by a range of stimulus measures as the economy looks to recover from the pandemic shock. Notably, the RBA's Term Funding Facility that provides low-cost liquidity to the banks fixed for 3 years has helped to lower mortgage rates further, while government initiatives have been rolled out to assist first home buyers and through the HomeBuilder scheme that offers grants of $25k to put towards building a new home (up to a value of $750k) or renovate an existing one (for contracts between $150-$750k where the pre-renovated valued is <$1.5m).
The value of commitments made to the owner-occupier segment in August lifted to its highest level on record at $16.3bn. In terms of where these loans are going through, approvals to purchase existing properties have soared since the reopening of the economy in May to be up by 33.5% over the period, which includes a 9.0% lift in August. Construction-related approvals (either for a new build or to purchase a newly completed home) soared by 17% in August following a 7.1% gain in July as the HomeBuilder scheme opened up.
First home buyer activity continues to accelerate with this segment of the market clearly benefiting from the range of stimulus measures in the market at present. Since May, the rebound has been very strong with lending commitments (ex-refinancing) advancing by around 35% and approvals by around 33%.
The next table summarises the latest movements in lending commitments across the states in August. The general theme was that there was strong growth coming through from both owner-occupiers and investors nationwide in the month.
Lending commitments made to owner-occupiers have well and truly gone past their pre-shutdown levels in every state.
It is a different story in the investor segment where commitments in most states have not quite recovered to the pre-shutdown levels, though given the current momentum that is likely not far away from being achieved.
Housing Finance — August | Insights
The rebound in housing market activity since the mid-May reopening of the Australian economy has been sharp, supported by a range of fiscal and monetary policy stimulus measures. The owner-occupier segment has driven this rebound, with first home buyers featuring prominently, though the investor segment that was initially slower to respond is now seeing the momentum build.
