Housing finance bottoms

Today’s housing finance data for May from the ABS recorded a fall in mortgage commitments:

As shown above, total finance commitments (excluding refinancings) fell by 2.4% in May, with owner-occupied commitments falling 2.7% and investor commitments falling 1.7%.

Over the year, total finance commitments (excluding refinancings) crashed by 20.9%, with investor commitments tanking by 27.8% and owner-occupied by 18.0%.

However, first home buyer (FHB) commitments rose by 0.8% in number terms and by 0.3% in value terms in May. However, over the year, FHB commitments were down by 7.7% (number) and by 7.5% (value):

FHB’s share of Australian mortgages (excluding refinancings) rose to 28% by number and 25% by value:

New home finance (construction and new combined) rose by 0.7% over May but fell by 12.3% year-on-year, signalling further headwinds for dwelling construction:

Finally, the below chart tracks the annual growth in the value of finance commitments (-19%) in trend terms, and shows both owner-occupied finance (-16%) and investor finance growth (-27%) have crashed; albeit all have stabilised:

Obviously, this data largely pre-dates the Federal Election, as well as the RBA’s latest interest rate cuts and macro-prudential easing by APRA. Expect mortgage credit to improve over the second half.

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