RP Data leading mortgage index declares boom over

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Regular readers will know that I’ve been tracking the RP Data leading mortgage index for some time looking for signs of impact from macroprudential tightening. Today I can offer a longer and more disaggregated time series courtesy of the good people at RP Data (which should never be confused with the douche bags at Australian Property Monitors). Here it is state by state:

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These indexes are a good leading proxy for Housing Finance and as you can see, they do not look well. I asked Tim Lawless about the relationship:

The CoreLogic RP Data Mortgage Index correlates highly with the ABS housing finance series and is a lead indicator for mortgage demand. The correlation with change in dwelling values is less clear, however broadly, as mortgage demand rises so to do housing value and vice versa. A slowdown in mortgage volumes implies either a slowdown in the number of prospective home buyers or a restriction on funds available, both of which should contribute to a slowdown in housing demand.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.