Australian Finance Group (AFG) has released its housing finance data for the June quarter, which registered a seasonal quarterly rise in the number of mortgage applications, but with applications falling heavily over the year.
The number of mortgage applications rose by a seasonal 4.2% over the March quarter but was down by 3.9% over the year, whereas the value of applications rose by 5.6% over the quarter and by 0.3% over the year:
As shown above, the number of mortgage applications has experienced almost zero growth for nearly four years (i.e. since September 2014), whereas the value of mortgage applications has barely grown for three years (i.e. since June 2015).
Investor mortgage demand remained stuck in the gutter at 28% of total applications in the June quarter and remains well down from the record 40% share in both the March and June quarters of 2015, whereas the share of mortgages going to first home buyers (FHB) remained at 13% on the back of FHB incentives introduced in the NSW and VIC State Budgets:
The interest-only mortgage share fell to an equal low 19%, and has clearly collapsed in the wake of the restrictions by prudential regulator, APRA:
That said, the average mortgage size rose marginally to a record high $504,900, and was up 4.3% year-on-year:
As noted previously, some caution should be exercised in interpreting AFG’s figures and extrapolating its results to the overall mortgage market, as measured by the Australian Bureau of Statistics (ABS), which are current to May 2018 (shown below):
AFG’s data measures mortgage applications, whereas the ABS measures actual mortgage commitments. Just over three quarters of applications on average become mortgage commitments, although this figure can obviously fluctuate month-to-month.
Nevertheless, this data is further confirmation that Australia’s housing market is slowing, and broadly supports the weakening in mortgage demand reported by the ABS, driven by investors.
