Australian housing finance commitments lifted by a modest 0.6% for the month in September as investor lending saw its fastest rise (2%) since May. Commitments have risen to be 9.5% above their cycle low in February, coming alongside a rebound in housing prices. Refinancing continued to moderate after reaching record highs in response to the RBA's rate hiking cycle.
September's 0.6% rise in commitments followed a 2.4% lift in August. This month, investor lending picked up to rise by 2%m/m (from 1.7%), while the owner-occupier segment consolidated (-0.1%m/m) after rising strongly in August (2.8%). The level of commitments in September ($25bn) was 9.5% above the February low. By comparison, housing prices nationwide have rebounded by 7.6% from their recent low (in Jan-23), based on CoreLogic's latest report.
Commitments rose by 1.5% through the quarter to September. This extended the rebound from Q2 (4.7%) that came after four consecutive quarterly declines. Investor lending was the driving impulse rising by 4.8%, with owner-occupier commitments fading slightly (-0.3%) due to weakness from first home buyers (-3.6%) and in the construction-related area (-1.6%), reflecting the effect of higher rates. Back in the June quarter, owner-occupiers and investors contributed in broadly equal measure to the rise in commitments.
Loan volumes to owner-occupiers declined across the board during the September quarter: upgraders -0.9%, first home buyers -3.9% and construction-related -4.1%, indicative of higher interest rates weighing on demand.
Weakness in refinancing activity was notable in today's report. In the month, the value of refinancing declined by 7.8% ($18.5bn), with falls coming through for both owner-occupiers (-8.4%) and investors (-6.4%). Refinancing declined by 6.9% in August. The volume of refinancing commitments to owner-occupiers was down 10.8% in September, declining by 3.4% in Q3. After climbing to record highs, refinancing activity is moderating, with a pause in RBA rate hikes over its recent meetings likely also a factor.
