This week’s mortgage commitment data from the Australian Bureau of Statistics (ABS) revealed a record bounce in mortgage demand, with new commitments (excluding refinancings) surging by 8.9% in July and by 11.8% year-on-year:
The next chart plots the rolling annual change in the value of mortgage commitments (excluding refinancings) against CoreLogic’s 5-city dwelling value growth to August. Since the ABS’ trend series has been suspended, the mortgage data has been smoothed using a three month moving average to reduce volatility:
As you can see, mortgage growth has historically been a strong leading indicator for price growth. Thus, the decline in mortgage growth – from 16% in March to 6% in July – signals further falls in property price growth.
