RBA: Mortgage growth crashes deeper into abyss

The Reserve Bank of Australia (RBA) has released its private sector credit aggregates data for the month of August 2019:

A chart showing the long-run breakdown in the components is provided below:

Personal credit growth (-0.2% MoM; -0.6% QoQ; -3.4% YoY) has plunged, whereas business credit growth (0.2% MoM; 0.5% QoQ; 3.4% YoY) and housing credit growth (0.2% MoM; 0.6% QoQ; 3.1% YoY) are at least growing, albeit slowly.

A long-run breakdown of owner-occupied credit (0.34% MoM; 1.08% QoQ; 4.72% YoY) and investor credit (-0.10% MoM; -0.22% QoQ; 0.06% YoY) is provided below:

Overall annual mortgage growth has tanked to an all-time low, with especially sharp falls in investor credit growth:

The below chart shows that quarterly mortgage growth also fell to the lowest on record in August:

Driven by investors:

This is a weird result given the boom in house prices. More on this tomorrow.

Comments

  1. Something doesn’t add up.

    House prices soaring while mortgage growth slowing? This divergence won’t last. Once side of this picture will meet the other

        • Yes Australia’s house price records now taken over by vested interests…..The NSW Government owned Land and Property now fallen into the hands of CBA & Co/Partners. CoreLogic methodology by vested interest Chris Joye. Dear me the quarterly housing credit growth in August fallen to record low with booming inner Sydney and Melbourne house prices… doesn’t add up?????

      • Exactly. You could have 10 apartments in one complex NOT sell for $1m and stay there with 1 selling for $1.1m and core logic will post a 10% growth. Low volumes, no sales and blowouts in days on market are not in the equation.

        • More slaves in China than Auz, smart local developer will buy back when Chinamen go to wall. Chinamen and casinos are permanent joint partners…..closely followed by Aussie banks.

    • I reckon the millenials have just stopped eating avocado’s so now they can just buy houses with cash.

    • Jumping jack flash

      blow off top – the massive mountains of debt from all the rubes accumulate at the top of the pyramid and these skew the statistics as they are passed around between the upper echelons.

      Classic ponzi death,.

  2. Professor DemographyMEMBER

    Wowsers. Unless there is a quick ‘uptick’ in September it looks as though there really won’t be enough money out there to support any decent rise in stock on the market?

    I reckon we are going to see some more faster than expected rate cuts for sure.

    • Oh yes desperate life support measures. Unfortunately excess life support mortgages kill the host (economy). Best to leave some income for the real economy.

  3. Rapid price growth with declining local finance growth ……. does this point to foreign buying ??
    Tracking towards 16% annual in Vic !
    Can locals afford to ramp it this hard !

  4. 1. Volume remains low.
    2. It’s a closed market, comprised of equity rich up-traders and down-traders, i.e. cashing in their chips, less need to borrow or borrowing less.
    3. The bigger borrowers – FHB’s and leveraged investors – still on the sidelines.

    That said…the beast did appear to take hold these last few weeks in September, so perhaps we’ll see evidence of this in the next release.

  5. Low volumes, low credit growth, but and strong price growth – so far consistent with a good, solid Bull Trap pulling out FOMO OOs and FONGO investors, which have found their price points.

    Seems bad for just about everyone except REA and Domain…?

    • Low volumes etc. cannot be good for REA and Domain either.

      Market exhaustion can last for a very long time, until the next material news comes out. Then the market will rocket if the material news is good or crash if the material news is bad.

  6. Possible explanation: strong credit growth and Syd and Melb offset by rest of country frantically trying to pay down loans as fast as possible.

  7. Strange as this data doesn’t correlate to the surging property prices in Melbourne. Volumes have picked up now again, values still rocketing up.

    If this doesn’t uptick in September then there’s a serious chance this is peak bull trap with no legs. Confused and disillusioned what to do, need a house to live in and also suffering fomo…

  8. Let me put this straight.

    This is working as planned…. mortgage growth numbers are being “goosed” intentionally (delayed reporting, intentionally misclassified, held back untill confirmed, all manner of goosing ) to provide strength to RBA’s and APRA’s story that “easing monetary policy is not goosing housing credit growth”. Industry know that sheeples look only at CoreLogic/MSM numbers, as long as CoreLogic/MSM relay the “good news story” they are happy. They want the RBA and APRA to cite “credit growth” and they do.

    Massive co-ordinated efforts to tell two different stories to consumers of different data.
    There hasn’t been a better time to screw.