The upswing Australian housing finance commitments was paused in February as the value of borrower-accepted loans posted their first monthly decline since May. This was driven by a 1.8% fall in commitments to owner-occupiers, with declines recorded in both the upgrader (-4.5%) and first home buyer (-4.0%) segments. In contrast, investor commitments advanced for a 9th consecutive month with a 4.5% rise.
Housing Finance — February | By the numbers
- Housing finance commitments ($ value, ex-refinancing) declined for the first time in 9 months, softening by 0.4% in February to $28.6bn. This came after a 10.5% surge in January, while the annual pace moved a little higher to 48.8% from 44.3%.
- Owner-occupier commitments pulled back by 1.8%m/m to $21.7bn (prior 10.9%m/m) but are up by 55.2% over the year.
- Refinancing by owner-occupiers posted a 3rd consecutive double-digit month-on-month gain, rising by 11.1% to $8.6bn (21.0%yr).
- Investor commitments lifted by 4.5%m/m to $6.9bn (prior 9.4%m/m), driving annual growth up from 22.7% to 31.6% — a near 4-year high.
Housing Finance — February | The details
Policy support from low rates and government incentives since the onset of the pandemic have combined with reopening dynamics to drive an acceleration in housing finance activity from the second half of 2020. February's data reported a pause in this momentum, centred on the owner-occupiers. Commitments to the segment fell 1.8% overall to $21.7bn (55.2%yr), with the declines being driven by upgraders (-4.5%) and first home buyers (-4.0%). Meanwhile, investor loans, which had a more delayed pick up initially, are now running very strongly elevating by a further 4.5% to $6.9bn (31.6%yr).
Reflecting the moves in commitments, loan approvals to owner-occupiers pulled back for both upgraders (-3.2%m/m) and first home buyers (-3.3%m/m). Construction-related approvals slowed to a 1.6% gain overall for its weakest month-on-month gain since the inception of the HomeBuilder policy. But with a month to go before the scheme ends it has already had a profund effect with approvals of this type up by more than 118% on a year earlier. Loan approvals for new construction are running at 166%yr while those for newly constructed homes are up 34%yr.
For the states, owner-occupier commitments fell in New South Wales (-4.9%m/m) and Queensland (-2.8%m/m), which more than offset gains across the rest of the nation. Weakness in first home buyer commitments was more spread out in the month, indicating the momentum is starting to fade; New South Wales -4.8%, Victoria -1.9%, Queensland -5.7% and Western Australia -5.5%. However, state-based investor commitments lifted further rising in all jurisidctions except in Tasmania.
Housing Finance — February | Insights
Momentum in the upswing in housing finance activity was paused in February due to a pullback in the owner-occupier segment from both upgraders and first home buyers. However, activity from investors lifted further. The upswing has pushed house prices higher with data from CoreLogic out earlier today reporting the fastst month-month gain nationally in March of 2.8% since late 1988.