Via the excellent Jonathon Mott at UBS:
Housing credit growth bottoms at 3%. How sharply will it recover?
With house prices bottoming 8 months ago post the Federal election, new lending volumes have risen sharply. Owner occupied (ex refi) lending flow has risen 20% over this period and is only 4% off its all-time highs, while Investment Property Lending has bounced 10%, but remains 35% below levels seen in 2017 (pre Credit Crunch). However, after the rate cuts by the RBA, approximately 90% of variable rate borrowers have left their monthly repayments unchanged. This has increased the runoff/amortisation rate of the existing mortgage book which until now has largely offset the pick-up in new lending. The month of December (0.3% M/M) appears to be the inflection point with Y/Y housing crSedit growth bottoming at 3%. However, we do not expect a rapid recovery given much of the improvement in owner occupied lending is likely to have already occurred. As a result, any sustained pickup in housing credit will need to be driven by investors (37% of system mortgages).
