Australia’s mortgage rebound solidifies

Today’s housing finance data for September from the Australian Bureau of Statistics (ABS) recorded a continued rebound in mortgage commitments:

As shown above, total finance commitments (excluding refinancings) rose by 1.3% in September, with owner-occupied commitments rising 3.2%, more than offsetting a 4.0% fall in investor commitments.

However over the year, total finance commitments (excluding refinancings) fell by 2.7%, with investor commitments tanking by 13.0% but owner-occupied rising by 1.4%.

First home buyer (FHB) commitments fell by 1.9% in number terms and by 2.0% in value terms in September. Over the year, FHB commitments were up by 6.8% (number) and by 16.9% (value):

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

New home finance (construction and new combined) rose by 0.8% over September and was up by 0.2% 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 (-2.7%) in trend terms, and shows both owner-occupied finance (+1.4%) and investor finance growth (-13.0%) are showing an improving trend:

The above data shows is further evidence of Australia’s property recovery, given growing new mortgage demand is the key driver of rising prices.

Unconventional Economist

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

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Comments

    • When the owner occupier drives the prices up enough investors will then be able to release equity for a deposit on a new IP, then they will flood the market. This is that rotation that Peachy talks of. I hope she is wrong.

  1. Owner occupiers finances up, investors down BUT FHB share of mortgages drops which I thought would be mainly OO. Doesn’t look like things are solidifying it looks like the bounces is a bit precarious

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