Strong mortgage rebound driven by Sydney and Melbourne

CoreLogic’s research analyst, Cameron Kusher, has released some interesting analysis of last week’s ABS housing finance data, showing that NSW (Sydney) and VIC (Melbourne) are leading the strong rebound, which is reflected by their rising dwelling values:

The ABS results confirmed that housing finance commitments data has shown a sharp rise with the uplift in commitments matching the turnaround in dwelling values seen since mid-May. According to CoreLogic research analyst Cameron Kusher, “this result has also mirrored the jump in auction clearance rates seen over the same period”…

As highlighted (refer adjacent 2nd chart), the components of housing finance looks at commitments in NSW where a lift in the value of lending was recorded over recent months. Owner-occupier lending to nonFHB in July was the highest it has been since November 2018 and was 14.3% higher over the month. Owneroccupier FHB lending was 33.6% higher over the month and the highest since October 2009. Investor lending rose to its highest monthly value since December 2018 and was 4.8% higher over the month.

Victoria has also see the value of lending trend higher in July 2019 with owner-occupier non-FHB commitments and investor commitments recording their highest monthly value since November 2018 while owneroccupier FHB commitments recorded their highest monthly value on record. Compared to the previous month, owner-occupier non-FHB commitments increased in value 17.1%, owner-occupier FHB commitments rose 15.3% and investor commitments rose by 13.3%…

Cameron Kusher said, “It’s still early days, however, there are some clear signs that demand for mortgages is rising, particularly in NSW and Vic. “August 2019 saw a big increase in national dwelling values which will likely mean a large lift in lending next month. Moving forward as more stock comes to the market in spring, we would expect the trend towards increasing demand for mortgages to continue.”

Nothing we don’t already know, with the mortgage rebound already surpassed by the surge in auction clearance rates across Sydney and Melbourne:

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