Australia’s mortgage market goes BOOM!

Today’s housing finance data for August from the Australian Bureau of Statistics (ABS) recorded another strong rebound in mortgage commitments:

As shown above, total finance commitments (excluding refinancings) rose by 2.9% in August, with owner-occupied commitments rising 1.9% and investor commitments rising 5.7%.

However over the year, total finance commitments (excluding refinancings) fell by 5.0%, with investor commitments tanking by 13.0% and owner-occupied falling by 1.7%.

First home buyer (FHB) commitments also rose by 5.2% in number terms and by 5.9% in value terms in August. Over the year, FHB commitments were up by 8.0% (number) and by 16.4% (value):

FHB’s share of Australian mortgages (excluding refinancings) rose to 30% by number and 27% by value:

New home finance (construction and new combined) rebounded by 1.1% over August but was down by 5.9% year-on-year:

As you can see, increased demand for purchases has been largely offset by lower demand for construction.

Finally, the below chart tracks the annual growth in the value of finance commitments (-9.3%) in trend terms, and shows both owner-occupied finance (-6.1%) and investor finance growth (-17.1%) are showing an improving trend:

Above is more evidence of Australia’s property recovery as growing new mortgage demand is the key ingredient to rising prices.

Leith van Onselen

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